REVISION WORK FOR UNIT TEST (2022-2023)

GRADE: IGCSE-2 SUBJECT: BUSINESS STUDIES

Instructions- Answer the following questions in the note book after revising the concepts
thoroughly. Submit it on Thursday, 14th July 2022.

11/07/2022

Answer the following.

Hasan Ahmed is a computer software engineer for a technology company in Country Z. He
has a salary of $5,000 a month. His income level is taxed at the rate of 20%
1. How much disposable income would Hasan have after paying tax on his income?
2. The government of country Z has raised the tax rate to 25%. What would be the impact on
Hasan’s disposable income and his spending habits?

3. ACTIVITY
Company XY wants to expand its operations in a foreign country. It looks at the corporation
tax rates in Countries A, B and C to see which country offers the best business environment
for them.
Corporation tax rate (on income
Country Tax paid ($)
less than $1,000,000)
A 28%
B 26%
C 32%

1. Assuming a profit of $600,000, copy and complete the table to show the tax that Company
XY may have to pay in each of these countries.
2. Which country should XY expand its operations in based on the corporation tax rate?
3. What is the corporation tax rate in your country? Do you think it is competitive with
neighbouring countries in order to attract foreign investment? (Hint: Use the internet or ask
your teacher to provide you with business newspapers or journals to do your research.)

12/07/2022
4. Country X has one international airport in its capital city. The existing airport is unable to
handle the increased air traffic. The government is planning to open a second airport. The
proposed location is near a residential area. There has been a lot of opposition from
environmentalists and the community in the area of the proposed location. The government,
however, thinks this will be good for the economy (which is in recession) and wants to go ahead
with the decision.
a) Identify the stakeholders involved in this business decision.

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 b) As a spokesperson for the community, identify and analyse the social costs that the
community would have to experience because of a new airport near them.
c) Imagine you are a government official placed in a decision-making committee of this project.
Explain the economic benefits of this decision and how they will help the economy grow.
d) From the point of view of an environmentalist, discuss the impact (social costs) that this
business decision would have on the environment.
e) Present the above arguments of at least three of the stakeholders (identified in questions
1) in a table. Conduct a cost-benefit analysis and evaluate whether this project is worth
considering. Do the economic and social benefits exceed the social costs?
5. What problems are caused by recessions? How might businesses react in a period of recession?
6. Why does the government place importance on economic growth?
7. What is the impact on business of a) increased government spending b) decreased government
spending.

13/07/2022
1. ACTIVITY
The interest rate changes made by the Bank of Botswana from 2008 to 2012 are shown in
figure.

Interest rates in Botswana, 2008-2012

Gregor Naledi is thinking about buying a house. He met with the bank manager to apply for a
housing loan/mortgage. The bank manager explained how changes in interest rates could
effect how much he has to spend each month. He did this by analysing the changes in interest
rates and their impact over the last few years on a borrowed amount of 650,000 pula.
Year Interest rate Monthly payment (pula)
2008 14.5% 7,854
2009 15.5%
2010 10%
2011 9.5%
2012 9.5%

a) Copy and complete the table above.

b) Do you think the changing interest rates are likely to be helpful to Gregor?
2. List the main economic objectives of a country.
3. Explain how government control the economic activity in their country.

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4. What are the main stages of a business cycle? Identify at least two characteristics of each
stage.
5. Make a list of some of the different types of taxes that affect business and consumers.
6. Discuss the effect of an increase in income tax rate on consumers.
7. Explain how businesses are affected by a decrease in interest rates.
8. How might business respond to an increase in interest rates?

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