2.7 Political Factors

• Political stability fosters a predictable investment environment
• Match the positive political factors with their effects on businesses:

  Supportive government policies ↔️ Encourages investment

  Stable legal framework ↔️ Reduces uncertainty

  Trade agreements ↔️ Opens new markets
• Changes in taxation are considered a negative political factor
• Political stability encourages businesses to make long-term commitments
• Match the negative political factors with their effects on businesses:

  Unstable political climate ↔️ Discourages investment

  Corruption and bureaucracy ↔️ Increases operational costs

  Regulatory burdens ↔️ Reduces flexibility
• What is the primary influence of political factors on businesses?

  Government actions
• Unstable political climate is a negative political factor
• Match the positive political factors with their effects on businesses:

  Supportive policies ↔️ Increases business confidence

  Trade agreements ↔️ Expands market access
• A stable legal framework provides a predictable business environment
• Corruption is a positive political factor for businesses.

  False
• Order the steps in assessing the impact of political factors on businesses:

  1️⃣ Identify political factors

  2️⃣ Assess positive and negative effects

  3️⃣ Analyze long-term implications
• What is the primary goal of government policies in relation to businesses?

  Predictable investment environment
• Fiscal policies, such as tax rates, directly affect business profitability
• Regulatory policies can enhance a company’s reputation.
• What is one key benefit of political stability for businesses?

  Investment confidence
• The formula for economic growth includes the capital-output ratio