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.
(a)[2]
What does the term 'economic boom' mean?
(b)[2]
State two stages of the business cycle apart from boom.
(c)[4]
Explain how a rise in interest rates might affect Nellis.
(d)[6]
Identify two stakeholder groups. Explain why each one is important to this business.
(e)[6]
The Managing Director thinks that the new legal controls to protect the environment will only reduce the profitability of businesses such as Nellis. Do you agree? Justify your answer.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “A strong increase in the level of economic activity, or a period when GDP rises rapidly” …