2.5 - external influences

Question 1

external influences

Answer 1

• government
• legislation and regulation
• environmental factors
• social factors
• changes in population
• world events
• consumer tastes
• economic climate
• pressure groups

Question 2

main aims of the government

Answer 2

• keep prices stable
• keep unemployment down
• keep borrowing down
• help the economy grow

Question 3

inflation

Answer 3

rate of change in the average price level in an economy over a given time period

Question 4

measuring inflation

Answer 4

• consumer price index = only goods and services, measured by basket of goods
• retail price index = includes bills/rent

Question 5

disinflation

Answer 5

temporarily slows down

Question 6

deflation

Answer 6

goes down

Question 7

exchange rates

Answer 7

the price of one currency compared to another
cost of product in currency/exchange rate = amount in currency

Question 8

impact of a rise in exchange rates on imports and exports

Answer 8

demand for UK exports rises = increase in demand for £’s = due to supply and demand, this raises the value of the £ = when the exchange rate has risen, it has appreciated = this then pushes up the price of exports

Question 9

impact of a fall in exchange rates on imports and exports

Answer 9

demand for UK exports falls = decrease in the demand for £’s = due to supply and demand, this reduces value of £ = when exchange rate has fallen, it has depreciated = this pushes down the prices of exports

Question 10

SPICED

Answer 10

Strong
Pound
Imports
Cheaper
Exports
Dearer

Question 11

interest rates

Answer 11

the cost of borrowing and the reward of saving

Question 12

bank of england base rate

Answer 12

often called the interest rate or bank rate
sets the level of interest all other banks charge borrowers
can change a minimum of every six weeks

Question 13

effect of interest rates on business costs

Answer 13

• affect interest charges on overheads and borrowing
• interest payable on loan would increase
• if a loan has a fixed rate of interest, interest rates in the economy wouldn’t affect it
• if a business took out a new loan, this would increase the interest payable and overheads

Question 14

effect of interest rates on business investment

Answer 14

• the cost of loans
• the attractiveness of saving
• paying off existing loans
• a fall in demand

Question 15

the business cycle stages

Answer 15

• boom/peak = maximum amount of growth
• recession/downturn
• trough/depression/slump = bottom
• recovery/expansion/upswing = improving

Question 16

business cycle

Answer 16

shows periods of growth and decline within developed countries

Question 17

why is legislation needed in business?

Answer 17

• stops businesses from exploiting workers
• not putting employees at risk
• helps businesses run their businesses properly
• no cutting corners

Question 18

internal stakeholders

Answer 18

• owners
• managers
• workers

Question 19

external stakeholders

Answer 19

• customers
• suppliers
• the community

Question 20

main roles of business legislation

Answer 20

• regulate the rights and duties of people
• protect people dealing with business from harm
• ensure the treatment of employees is fair
• protect investors, creditors and consumers
• regulate dealings
• ensure a level playing field

Question 21

employment law

Answer 21

• any piece of government legislation designed to protect employees from exploitation
• pay, recruitment, discrimination, working conditions