Economic issues

The Government of country X has recently raised interest rates. Identify and explain two effects that an increase in interest rates could have on FF.

May/June 2015

Nuwan is a sole trader. He runs a specialist sports shop that sells a broad selection of cricket and tennis products. His 3 employees are trained to deliver high-quality customer service. Nuwan is glad that the economy is expanding, but he is concerned that interest rates may rise. He thinks his small business has benefits when compared with large retailers. Nuwan wants to raise profit margins and believes the best approach is to cut costs.

May/June 2016

Five years ago, Manisha began baking cakes for celebrations such as weddings and birthdays from her home. She now runs a small shop and employs 3 staff. Product quality matters greatly to her business. Manisha said: ‘I have benefited from the economic boom but I did not expect demand to increase by 500% each year. Somehow I have managed to cope with higher interest rates and all the challenges of being a sole trader. The business is profitable at last but I have to work every day.’ A friend has offered to become Manisha’s business partner.

May/June 2017

DPC runs 200 takeaway pizza outlets. More than 75% of its pizzas are ordered via e-commerce. The Managing Director believes that 2017 was a successful year. She commented: ‘Looking to the future, there are signs that the economy is expanding. However, DPC faces several difficulties. The Government plans to raise the minimum wage to $5 per hour. DPC also has to react to environmental pressures. Food waste and litter from used pizza boxes are problems. Complaints from the local community about this are too high.’

May/June 2018

REW has received many awards for the appearance and design of its carpets and rugs. All of the wool it uses comes from local suppliers. For this year, REW’s aim is to survive and keep operating. The Managing Director is worried that the country’s Gross Domestic Product has been declining for some time. During the recession, the Managing Director plans to begin selling REW’s products in other countries. Market research shows that demand would be strong.

May/June 2019

Explain four reasons why the relative importance of the primary, secondary and tertiary sectors changes in a country.

May/June 2021

VVA is a business located in country X. It makes school backpacks (bags). VVA distributes its products through retailers. The Managing Director understands that demand can be influenced by several factors, including the stage of the business cycle and how competitive the market is. VVA brings in 45% of its raw materials from overseas. The Managing Director is concerned that import tariffs and import quotas, together with an appreciation in country X’s exchange rate, may have an effect on VVA.

May/June 2023

Explain two likely effects on TSE if the business cycle in country P enters the recession stage.

May/June 2025

Nellis is a public limited company. Its business is the construction of large, high-end houses. In the last 3 years, profits have gone up because the country is going through an economic boom. “It’s not all good news - the Government has announced plans to increase interest rates and introduce new legal controls to protect the environment,” said the Managing Director. He thinks these new legal controls to protect the environment will simply reduce the profitability of businesses such as Nellis.

Oct/Nov 2015

WKN sells household products, including plates and brushes. In the previous year, sales in WKN’s 200 shops went up, but profit dropped by 80% to $5m. WKN’s Human Resources Director said: ‘All retailers are finding this part of the business cycle difficult. WKN must reorganise the business. This will create redundancy for 1800 shop workers. WKN intends to create 100 new jobs in the marketing department at head office to help preserve customer loyalty. The company is cooperating with trade unions to make these changes happen.’ WKN must decide whether the candidates for the new jobs should be chosen from the workers who are being made redundant.

Oct/Nov 2019

Identify and explain two distinctions between MF and unincorporated businesses.

Oct/Nov 2019

Explain the impact of these changes on GJ. • Depreciation in the exchange rate of country Z • Increase in income tax in country Z

Oct/Nov 2020

Explain two possible effects on SA arising from the rise in the rate of inflation in country X.

Oct/Nov 2022