CHAPTER 6

Takeover - acquisition of over 50% or controlling % of a company.

Merger - both shareholders own shares in the merger
CHAPTER 7

CHAPTER 8
CHAPTER 9
1. Macro-economic objectives include growth (increase in GDP), inflation,
unemployment, balance of payments, exchange rate, wealth and income
transfer(through tax)
2. Higher real GDP increases living standards, consumer incomes, demand,
employment, taxes and decreases poverty and social expenditure if population
increase is slower but rapid growth can do more harm than good.
3. Business investment is expenditure on equipment, new technology and research.
4. Business cycle regular GDP swings [Boom. Recession, Slump and Growth]
5. Inflation is an increase in the price of goods whereas deflation is a decrease both
caused by either cost-push or demand-pull and is measured by comparing different
consumer price indices CPI.
6. Unemployment is a cost to self and society caused by cyclical, structural or frictional
factors leading to crime, low demand and low supply.
7. Balance of Payments is the balance of imports and exports of an economy driven
by the supply and demand which leads to either appreciation or depreciation of the
economy’s currency (Exchange rate).
8. A deficit happens when the value of goods imported exceeds the value of good
exported.
9. Echange rate usually driven by supply( By Investors, travellers and exports) and
demand(By investors, tourists, imports).
10. Currency appreciation is when the value of the domestic currency increases against
a foreign one creating more purchasing powers for importers.
11. Product innovation, aftersales services, modern technology, quality, good promotion
and distribution can make a product more competitive than the price.
12. A government takes on macro economic policies inorder to contain the aggregate
demand determining the value of GDP and level of employment.
13. Social security, health services, lawa and order, education and defence are govt’s
major expenditure streams.
14. Tax revenues include income tax, corporate tax, value added tax and excise duties.
15. A budget deficit is created when the Chancellor of the Exchequer announces more
expenditure than revenue taxes and the opposite is surplus.
16. Any changes in taxes or expenditure of the government is under Fiscal policy which
is either expansionary(inc. in exp and dec. in taxes) or contractionary (inc. in taxes
and dec. in exp)
17. Changes to the rate of the interest and supply of money in the economy are dealt
with in the monetary policy.
18. Controlling inflation is the primary objective of any central Bank.
19. An increase in the interest rate will reduce credit purchases, reduce profit of highly
indebted firms, and appreciate the currency exchange rate by increasing the it’s
demand.
20. A coomon curreny would
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22.
23.

CHAPTER 10
1.

CHAPTER 11
CHAPTER 12