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Chapter 21 - Businesses and the political and
legal environment
The operation of the UK economy affects everyone and every business in the country. Changes in
the level of production, employment or prices can have significant consequences for manager, for
employees and for consumers. However we cannot consider the…

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Expansionary Fiscal This entails cutting taxation/ increasing government expenditure on
Policy health, education etc. the effect will be to increase the amount the
government borrows to fund its expenditure.
Contractionary Policy This is brought about by reducing government expenditure of increasing
taxation, or by both policies simultaneously. The effect is…

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Supply Side Policies
These are a range of measure intended to improve the operation of free markets and the amount
that is produced by the economy.

Labour Market Measures In 1990 the government reduced the power of
trade union to permit labour markets to operate
more freely.
Privatisation This is…

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year olds.

The Equalities Act The equalities act replaced a number of earlier anti-discrimination
2010 laws to simplify legislation. The protected characteristics are:
Age/Disability/Race/Gender Reassignment/ Marriage/
Religion/Pregnancy/Sex/Sexual Orientation

Unfair Dismissal Unfair dismissal is the termination of a workers contract of
employment without a legal reason. Legislation relating to unfair

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Consumer protection legislation
Consumer protection is a term used to describe a series of acts designed to safeguard consumer

Businesses charging excessively high prices or rate of interests.
Unfair trading practices
Unsafe products such as children's toys with sharp objects
Having insufficient information on which to take purchasing decisions.…

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The government imposes fines on firms who breach legislation relating to the protection of the

Strategic responses to changes in the political and legal environment

The political and legal environment can have a major impact on the way in which businesses operate
and also their costs of production. Because…


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