1.5.4 The Economy & Business Flashcards
Economy
The state of a country in terms of how many goods and services the country is producing and consuming
Gross Domestic Product
The total value of all goods and services produced by a country annually
4 parts of the business cycle
Boom, Recession, Slump, Recovery
Price Elacticity
How the change in price of a product affects the demand
Demand
Customers want to buy products / Services and the willingness to pay a specific price for them
Unemployment
People who are willing and able to work but cannot find work
How is unemployment measured
How many people on Job Seekers Allowence (JBA)
Interest Rates
The cost of borrowing money and the reward for saving money
Increase in interest rates for consumers means
Increase in loan repayment costs
Borrow less as it is more expensive
Less disposable income
Increase in interest rates for firms means
Reduced production
Cut costs eg. redundancies
Reduced investment
Exchange rates
The value of one currency expressed in terms of another currency
Import
Money flows out of the UK and goods come in
Export
Money flows into the UK and goods leave
Will you get more or less foreign currency for a strengthening exchange rate
More
How to calculate exchange rates
From £ to foreign currency multiply
From a foreign currency to £ divide
