Business Environment and PEST Analysis Quiz

What does a PEST analysis examine?

• Political, Economic, Social, and Technological environments

• Product, Environment, Sales, and Technology

• Price, Economy, Strategy, and Trade

• People, Ethics, Society, and Technology

Why is it important for businesses to be aware of the external environment?

• Because the external environment is always stable

• Because it helps businesses remain competitive by adapting to changes

• Because it allows businesses to ignore internal factors

• Because it ensures businesses never face competition

What is deflation?

• A general fall in price levels

• A general rise in price levels

• An increase in government spending

• A decrease in interest rates

If the government wants to dampen demand in the economy, what action might it take regarding interest rates?

• Lower interest rates

• Raise interest rates

• Increase government spending

• Reduce taxes

How does an increase in interest rates affect domestic consumption?

• Domestic consumption rises

• Domestic consumption falls

• Domestic consumption remains unchanged

• Domestic consumption becomes unpredictable

What does GDP stand for in the context of economic growth?

• Gross Domestic Product

• General Domestic Price

• Government Debt Percentage

• Global Development Plan

During the recovery phase after a recession, what typically happens?

• Unemployment rises and consumer spending falls.

• Businesses see new opportunities and unemployment falls.

• Businesses cut back on investment and stock.

• The cost of borrowing increases significantly.

Explain how changes in consumer demand and business investment contribute to the transition from a downturn to a recession.

• Increased consumer demand and business investment lead to a recession.

• Falling consumer demand and reduced business investment can cause a downturn to turn into a recession.

• Stable consumer demand and business investment prevent a recession.

• Rising consumer demand and business investment cause a downturn to end quickly.

Why might a business choose to keep export prices the same after a fall in the value of the pound?

• To try to win new customers in export markets.

• To avoid increasing their margins.

• To reduce the cost of imports.

• To increase the value of the pound.

Explain how the price elasticity of demand can influence an importer’s decision when the value of the pound falls.

• If demand is elastic, passing costs to consumers may reduce sales significantly.

• If demand is elastic, passing costs to consumers will increase sales.

• If demand is inelastic, reducing margins will always increase profits.

• If demand is inelastic, imports become less expensive.