Podcast
Questions and Answers
How do businesses contribute to lower unemployment in the economy?
How do businesses contribute to lower unemployment in the economy?
- By creating job opportunities. (correct)
- By reducing the number of small businesses.
- By taking advantage of foreign investments.
- By increasing local government funding.
What impact does business expansion have on tax revenue for the government?
What impact does business expansion have on tax revenue for the government?
- It leads to a decrease in tax collection.
- It reduces the need for taxation altogether.
- It only affects corporate taxes.
- It generates more revenue through increased employment and profits. (correct)
How can increased competition among businesses help manage inflation?
How can increased competition among businesses help manage inflation?
- By encouraging businesses to become more efficient and lower costs. (correct)
- By reducing the number of businesses in the market.
- By limiting the availability of goods and services.
- By allowing prices to rise significantly.
What is one way businesses enhance community development?
What is one way businesses enhance community development?
What is a significant benefit of reinvesting profits in businesses?
What is a significant benefit of reinvesting profits in businesses?
How does economic growth relate to the expansion of businesses?
How does economic growth relate to the expansion of businesses?
Why is increasing entrepreneurship in Ireland beneficial?
Why is increasing entrepreneurship in Ireland beneficial?
What is one potential benefit of increased business activity related to entrepreneurship?
What is one potential benefit of increased business activity related to entrepreneurship?
Which of the following is a consequence of competition among businesses?
Which of the following is a consequence of competition among businesses?
How can increased prices by firms lead to inflation?
How can increased prices by firms lead to inflation?
What social cost is associated with increased business activity?
What social cost is associated with increased business activity?
What is a negative impact of businesses not considering environmental factors?
What is a negative impact of businesses not considering environmental factors?
What is a potential downside of having many foreign businesses enter local markets?
What is a potential downside of having many foreign businesses enter local markets?
What can result from firms focusing primarily on profit maximization?
What can result from firms focusing primarily on profit maximization?
Which statement best describes the effect of increased competition on local economies?
Which statement best describes the effect of increased competition on local economies?
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Study Notes
Benefits of Business to the Economy
- Businesses create jobs, reducing unemployment rates and minimizing government social welfare payments.
- Increased employment and profits lead to higher tax revenues (PAYE, VAT, corporation tax), which fund education, social welfare, health, and infrastructure.
- Competition from expanding businesses prompts efficiency, lowering costs and aiding in inflation control. For example, grocery stores compete to keep prices low.
- Job creation and a wider range of goods and services enhance public living standards significantly.
- Local Enterprise Offices focus on revitalizing areas and supporting small businesses, fostering community spirit and growth in regions impacted by closures and migration.
- Reinvesting profits allows firms to expand, resulting in more job creation and increased sales and profits.
- Business expansion drives economic growth, providing the government with more funds for grants and continuing economic stimulation.
- Increased entrepreneurship reduces dependence on foreign direct investment (FDI) by ensuring the loyalty of locally owned businesses as opposed to multinational corporations.
- Business growth leads to improved balance of payments, as exports rise and imports may decline due to competitive domestic products in the market.
- An enterprise culture can emerge, inspiring local entrepreneurship and creating demand for associated local suppliers.
Disadvantages of Business to the Economy
- Competitive pressures can cause smaller firms to close, leading to unemployment and increased social welfare costs, along with decreased tax revenues.
- Firms may raise prices to maximize profits instead of pursuing cost efficiency, potentially causing inflation. This may lead to wage demands from employees and a detrimental spiral of price increases.
- Profit-driven practices might neglect environmental responsibilities, leading to pollution, which harms critical sectors like food and tourism by deterring consumers.
- Increased business activity often results in social costs such as elevated road traffic, delays, noise pollution, and health risks for workers.
- Foreign competition may enter the Irish market, providing cheaper options for consumers, which can threaten local businesses.
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