Exam Questions and discussion areas.

Question 1

Macroeconomic stability

Answer 1

• real GDP growth
• unemployment
• inflation
• balance of payments

• public sector debt and the
budget balance

• the structure of the economy

Question 2

Human capital

Answer 2

• HDI
• Gini coefficient and income distribution
• years of schooling
• literacy
• life expectancy
• population size and structure.

Question 3

Inward investment

Answer 3

impact on employment, unemployment and human capital

• impact on real GDP and aggregate demand
• multiplier and accelerator effects
• effects on long-run growth and productivity
• spill-over effects on other firms
• impact on the balance of payments: exports and import substitution
• impact on the budget balance and public sector debt
• may stimulate spending on improvements to the infrastructure

Question 4

Do you recommend

that the company should invest in Brazil? .

Answer 4

the stability of the Brazilian economy
• political and social stability
• the rule of law and corruption
• whether the investment is likely to be profitable and whether it is secure
• the nature of any capital controls
• the infrastructure in Brazil
• the skills and abilities of the workforce
• financial and other support from the government
• regulations on business
• the tax regime; both corporate and individual taxes
• availability of finance
• the prospects for future growth of the Brazilian economy
• the size of the Brazilian car market and the potential for future growth
• access and proximity to businesses that can support the car industry, eg component suppliers
• potential for exporting cars from Brazil, eg access to other markets in the Americas
• the prospects for the value of the Brazilian currency, the real, and its stability