2.5 - External Influences Flashcards
What is the business cycle?
A cycle or series of cycles of economic expansion and contraction.
What is GDP?
Gross Domestic Product
Value of goods/services produced by UK businesses within a time period (usually 3 months)
What is growth?
Period of improving economics circumstances
- Business profits improve
- Increase consumer confidence
- More jobs
What is a boom?
When unemployment is very low and more disposable income
Rapid and significant growth
Recession?
When national output declines over 2 successful quartets
Slump?
Opposite to growth
- Profits fall
- Jobs lost
- Less wealth
Recovery?
First sign of growth
Interest rates?
Cost of borrowing money or the return for investing money
Inflation?
Sustained increase in level of prices for goods and services
Consumer protection legislation ?
Selection of laws that protect individual consumers against unfair selling practices for goods, services and digital content
Employee protection legislation ?
Regulates relationship between employees and employers
Contract of employment ?
Agreement made between employer and employee
Employment right act ?
States the duties and rights of the employee and employers
Exchange rates?
The value of one currency expressed in terms of another
Importers?
Businesses that buy goods from overseas
Exporters?
Businesses that sell goods overseas
Working time directive ?
- Limit on number of hours
- How long breaks should be
National minimum wage ?
Right to be paid a certain amount of money for worked performance
Income tax?
Workers pay income tax and national insurance contribution
Both affect ‘take-home’ pay
Corporation tax?
Businesses pay corporation tax on their profits
Value added tax (VAT) ?
Tax placed on all the goods we buy except food and children’s clothing
Exercise duties?
Specific taxes charged on certain products
Demand pull?
Buyers want to buy more than sellers can actually produce so sellers increase ptoces
Cost push?
Means businesses costs will start to rise and sellers need to put prices up to compensate
Fiscal policy?
Gov raise taxes, reduces disposable income
Gov reduce own spending
Monetary policy ?
Actions of BoE to control size and rate of growth
Statutory rights ?
Legal rights based on laws passed by parliament
Perfect competition?
Rare
Many competitors offering same product
Gives customer bargaining power
Monopolistic competition?
Many small firms offering differentiated products
Each has small market share
Oligopoly?
Dominated by small number of firms
Often use non-strategies to compete
Monopoly?
Only 1 provider for the service/good
They have control over price
Environmental protection act?
Act defines fundamental structure and authority for waste management and control of emissions into the environment
Competition act?
Addresses 2 key areas of anti- competitive behaviour
Health and safety at work act?
Wide ranging duties on employment. Employers must protect health and safety welfare at work on all employees.
Uncertainty?
When a business is unsure of what is coming for a business and consumers
Independent shop ?
Not part of a multinational chain or corporation
What is competition?
Ability to compete is yea ily influenced by structure of market in which a business operates. More competitive market is, harder task becomes
Impact of increase in interest rates on customers?
Borrowing more expensive, mortgage & loan payments increase, more interest earned
Impact of increase in interest rates on businesses?
Cost of borrowing increases, loans and payments increase, reduced customers spending, less profit
Impact of inflation on customers?
- Spend less
- Save more
- Higher pay possibly
Impact if inflation on businesses?
- lower sales
- supplies more expensive
- won’t borrow
- won’t expand
- may increase staff wages
Why is inflation good ?
Shows economy is growing
How do exchange rate fluctuations affect businesses?
Exchange rate will affect what business can afford
Materials/goods from overseas more expensive
4 types of tax?
Income tax
Corporation tax
VAT
Excise duties
Basic legal rights of consumers?
- no misleading descriptions
- needs satisfactory quality
- has to be fit for purpose
Why is uncertainty dangerous for a business?
- more people want to save than spend
- risk closing due to drop in sales
- less investment
- can’t plan for future
