1.5d The Economy And Business

Question 1

What impacts the economic climate of a business ?

Answer 1

• unemployment
• changes in exchange rates
• inflation
• changes in interest rates
• government taxation
• changing levels of consumer income

Question 2

How does falling unemployment in an area affect a business ?

Answer 2

• fewer potential employees that they can hire
• may need to increase wages
• people’s income higher , so they more money to spend on products
• employees are happier because job is secure

Question 3

What is inflation ?

Answer 3

• increases of price over time
• when inflation is high , cost of everyday item goes up
• when inflation is low , amount paid to suppliers remains low , employers less likely to ask for pay rises

Question 4

How can low interest rates influence a business ?

Answer 4

• low interest rates means customer income levels are high , benefits a business if they buy more products
• if a business sells good to consumer that rely on saving , low interest rates is not beneficial
• business can borrow money at a cheaper rate
• other costs are also low such as wages

Question 5

What is government taxation ?

Answer 5

• collection or payments of taxes , that are reinvested into public services such as education and healthcare

Question 6

What is an exchange rate ?

Answer 6

Measure of the value of one currency in another currency , has a great impact of importing and exporting goods