S6 BST Assignment 1 Name Cherry Wong Wan Chau Class 6A No. 28 Corrections 3. What are the indicators of an improving living standard in an economy? An improving standard in the economy is evident if per capita GDP and the private consumption expenditure increase steadily. 4. Explain how low interest rates help in business. Demand of having loans increases due to the cheaper for the household and firms to borrow. And the production costs will be lower since the low interest payment. As a result, more investment will be made by the business. Also, the debtors are going to lend more money in stead of saving into the bank. Low interest rate will relieve the interest burden of a business, particularly with a higher level of debt. 6. Explain why Hong Kong ‘s economy is highly susceptible to overseas economic and political conditions. Hong Kong’s economy is very susceptible to overseas political and economic conditions due to the linked exchange rate system. For this reason, Hong Kong does not have an independent monetary policy. Additionally, Hong Kong is small in size and has an open economy, so it is easily affected by the oversea conditions. 7. Give three reasons why the government regulates the meaning of Business in Hong Kong. Hong Kong government regulates the business because it wants to rule out the occurance of unfair competitions and to provide a stable and healthy economic situation. Besides, the government has the responsibility to protect the consumers, employees and the investors in a legal manner. Furthermore, the government has the obligation to control environment pollutions, such the air, noise pollutions, to provide a better business environment. 8. Give examples of three types of government regulations that affect Hong Kong business activities. Regulations on the fees of public utilities., for instance, bus fares, bus routes. Telephone, are implemented to ensure a harmonious business atmosphere. Next, the labor legislations include the hours of work , days of vacations and the safety of working environment are monitored and carried out. Besides, concerning the environmental protection, LPG is used in most of taxis and mini-buses, to ensure a better environment. 9. List four factors in the external environment which might affect a firm. The four factors are the Economic, technological, political and social factors.