CIE IGCSE Topical Past Paper 1
6.1 Economic issues
045/13/O/N/2024
Ramon is an entrepreneur. He plans to start up a home tutoring service to provide students with extra help to learn maths. Ramon is considering buying a franchise. He has prepared a business plan but is concerned about how an increase in the rate of inflation might affect his business. Ramon wants to know whether crowdfunding is the best source of finance for a start-up business to use.
(a) Define ‘inflation’. [2]
0450/12/M/J/2024
Avtar owns a car repair business which operates in the private sector. It is a small business with 2 full-time employees. Avtar wants to find out the best way for a business to increase added value. Avtar’s business needs finance for many reasons. Avtar wants to know how an economic recession might affect his business.
d) Explain two ways an economic recession might affect Avtar’s business. [6]
Way 1:
Explanation:
Way 2:
Explanation:
045/12/M/J/2024
DLT manufactures cups and plates in country X. Its factory uses flow production and has 75 employees. The Human Resources Director is aware that there are many legal controls over employment. DLT exports 30% of its products to country Y where it benefits from lower rates of taxation and no import quotas. DLT’s Managing Director is considering relocating its factory to another part of country X to meet the increased demand for its exports.
(b) Identify two benefits to a business of lower rates of taxation. [2]
Benefit 1:
Benefit 2:
045/12/F/M/2023
HCB manufactures cars in country X. It has 200 employees working in its factory. The business has changed its method of production due to new technology. HCB’s Managing Director is considering ways to become more ethical. She is aware that other businesses in country X have started to import cars. The interest rate in country X has increased due to rising inflation.
(a) Define ‘inflation’ [2]
(d) Explain two ways HCB could be affected by an increase in the interest rate in country X.
Way 1:
Explanation:
Way 2:
Explanation:
045/12/F/M/2023
AH is an insurance business. It operates in a competitive market. AH has 1000 employees including 50 supervisors. The supervisors use an autocratic leadership style. AH currently has a 5% market share and is planning to take over a competitor. The Managing Director is considering how to communicate with AH’s employees about the takeover. There are many sources of finance available to fund business growth.
(d) Explain two ways HCB could be affected by an increase in the interest rate in country X. [6]
Way 1:
Explanation:
Way 2:
Explanation:
045/11/M/J/2022
CTF is a public limited company. It manufactures beds using batch production. The Operations Director is using break-even analysis to calculate the margin of safety for children’s beds. An extract from CTF’s output data is shown in Table 2.1. The Operations Director wants to know how an increase in inflation might affect CTF. She knows there are many environmental pressures that a manufacturing business could respond to.
Table 2.1 Extract from CTF’s output data (children’s beds per month) | |
Break-even output | 14 000 |
Current level of output | 18 000 |
Maximum factory output | 25 000 |
(c) Outline two ways an increase in inflation might affect CTF. [4]
Way 1:
Way 2: