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Cambridge TECHNICALS OCR LEVEL 3 CAMBRIDGE TECHNICAL CERTIFICATE/DIPLOMA IN BUSINESS BUSINESS AND THE ECONOMIC ENVIRONMENT T/502/5500 LEVEL 3 UNIT 21 GUIDED LEARNING HOURS: 60 UNIT CREDIT VALUE: 10 Version 2: Updated to reflect current legislation and Acts. BUSINESS AND THE ECONOMIC ENVIRONMENT T/502/5500 LEVEL 3 UNIT 21 AIM OF THE UNIT Businesses do not operate in a vacuum; they are affected by the national and international economic environment. This unit helps learners to understand how the economic environment affects businesses and how government policies, especially financial and monetary policies, impact on UK business. Learners will gain an understanding of the reasons behind the current economic situation in the UK, which also affects them at an individual level. This unit also helps learners to understand the relationship between government spending and government economic policy and how this affects business. Equally, this unit will help learners to know how business activity influences Government policy. Finally, learners will increase their awareness of how international economic events and organisations influence UK businesses www.ocr.org.uk 2 Business and the Economic Environment Level 3 Unit 21 ASSESSMENT AND GRADING CRITERIA Learning Outcome (LO) Pass Merit Distinction The assessment criteria are To achieve a merit the To achieve a distinction the pass requirements for evidence must show that, the evidence must show this unit. in addition to the pass that, in addition to the pass criteria, the learner is able to: and merit criteria, the The learner will: The learner can: learner is able to: 1 Understand the impact P1 explain the effects, of on businesses of changes in the economic changes in the economic environment on a environment selected business P2 identify how government policies impact upon on a selected business 2 Know how government P3 identify the impact of M1 analyse the positive D1 evaluate the effects of spending impacts on government spending on and negative effects of government spending on businesses a selected business government spending on a selected business businesses 3 Understand fiscal and P4 explain how both fiscal M2 analyse the positive and D2 evaluate the monetary policies and the and monetary policy negative effects that fiscal consequences of fiscal effects on spending decisions have affected a and monetary policies and monetary policies on selected business have had on a selected a selected business business 4 Know how the P5 describe the impact of international economy international factors on a affects UK businesses and selected business competition 3 TEACHING CONTENT The unit content describes what has to be taught to ensure that learners are able to access the highest grade. Anything which follows an i.e. details what must be taught as part of that area of content. Anything which follows an e.g. is illustrative, it should be noted that where e.g. is used, learners must know and be able to apply relevant examples to their work though these do not need to be the same ones specified in the unit content. Learning Outcome 1 Understand the impact • Monetary policy: Role of the Bank of England, interest on businesses of changes in the economic rates (e.g. role of the Monetary Policy Committee), environment inflation control, value of the Pound Sterling against other currencies, sovereign debt, sovereign investment, • The business cycle: growth and recession (boom and bust) quantitative easing, regulation (e.g. role of the SFA). • Effects of the business cycle on demand, supply and competition at a local and national level Learning Outcome 4 Know how the international • Influence of business practices on the environment economy affects UK businesses and competition • Factors that impact on business: access to finance, interest rates, taxation, strength of the currency, inflation, • European factors: expansion of the EU, the Eurozone and employment, R&D investment, share value, capital the Euro, the EMU (European Monetary Union), effects investment (e.g. buyouts, venture capital, mergers), rise of of Eurozone countries in economic collapse or danger of prices and costs collapse, euro convergence criteria • Government policies that impact on business: fiscal • Global factors: BRIC economies, world poverty, stock policy (e.g. corporate tax, VAT), monetary policy (e.g. market crashes, banking deregulation and scandals, role interest rates), trade policy (e.g. balance of payments, of the IMF (International Monetary Fund), role of the WTO tariffs, trade agreements), legislative policy (e.g. legislation, (World Trade Organisation), industry-specific factors (e.g. oil regulation), competition policy (e.g. role of the Competition and gas prices), war and terrorism. Commission), industrial policy, social policy. Influence of business on Government policy (e.g. lobbying, fraud, It is important to maintain focus on the current law and practice corruption). in this area. The list given above is neither prescriptive nor exhaustive. Where legislation has been revised learners will Learning Outcome 2 Know how government consider the most up to date version as that will reflect current industry practice. spending impacts on businesses • Government spending: the budget, welfare expenditure, public services expenditure (e.g. education, health, public security), infrastructure expenditure (e.g. road building, airports), foreign aid, subsidies (e.g. agriculture), public sector borrowing (national debt) • The multiplier effect and its benefits to the economy at local and national level. Learning Outcome 3 Understand fiscal and monetary policies and the effects on spending • Fiscal policy: corporation tax, Capital Allowance Act, personal tax and allowances • Role of HMRC (Her Majesty’s Revenue and Customs), Comprehensive spending review, Redistribution of income www.ocr.org.uk 4
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