2.5 Flashcards
Legislation
Set of las suggested by government, made official by parliament
- Consumer protection
- Employee protection
- Environmental protection
- Competition policy
- Health and safety
Effects of inflation
- Increased cost of raw materials
- Cut back on investment
- Less exports
Characteristics of an entrepreneur
- Vision
- Passion
- Motivation
- Risk-taking
- Curiosity
- Creativity
- Confidence
Taxation
Percentage of income or spending paid by individuals and businesses to the government
Effects of taxation
Consumers have less money left over to spend on goods and services
Subsidy
Financial assistance provided by the government to support economic activities that it wishes to encourage
Exchange rate
Price of one currency expressed in terms of another currency
If currency increases…
- Imports from there become more expensive for other counties
- Exports become cheaper for the country
If currency decreases…
- Imports from there become cheaper for other countries
- Exports become more expensive for the country
Business cycle
Characterised by periods of expansion and recession
Expansion
Increase in positive economic indicators such as employment, income, output, wages, profits, demand, and supply of goods and services
Recession
Significant decline in real economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale and retail sales
Appreciation
Increase in the external value of one currency in relation to another currency
Deppreciation
Cost of a fall in value of fixed assets is recognised in the financial accounts of a business
Economies of scale
Internal
- Bulk buying
- Larger businesses can invest technology
- Larger businesses have better interest rates
- Can employ specialists for specific areas
External:
- Growing number of firms may encourage a more skilled workforce
- There is more change of there being collaborations between businesses
