2.5 External influences Flashcards
Define Inflation
The sustained rise in the general price level
Problems caused by inflation
- Increased costs
- Higher repayments on loans
- Consumers change spending habits
- International competitiveness
- Uncertainty
Define Exchange rates
The exchange rate is the value of one currency expressed in terms of another
Define Interest rates
The interest rate is a percentage reward offered for saving money and the percentage charged for borrowing money
Define Recession
A recession occurs when an economy experiences two consecutive quarters (6 months) or more of negative economic growth
Define The Business Cycle
The business cycle describes the upturns and downturns in the level of a country’s economic activity (GDP) over time
Define a boom
A boom is defined as a period of time where an economy experiences increasing/high rates of economic growth
Define Economic uncertainty
Economic uncertainty occurs when it is difficult to forecast the level of supply and demand in an economy
Define Legislation
Legislation refers to laws and regulations passed by governments that require businesses and individuals to conduct their behaviour in a particular manner
Impacts of legislation on businesses
- Consumer protection laws
- Employee protection laws
- Environmental protection laws
- Competition policy
- Health and Safety
Define Consumer protection legislation
Consumer protection legislation aims to ensure that consumers are treated fairly by the companies with which they interact
Define Employee protection legislation
Employee protection legislation aims to prevent the exploitation of workers
Impacts of Employee protection on legislation on business
- Changing working practices
- Potential penalties & rewards
- Compliance costs
- Higher labour costs
Define Environmental protection laws
Environmental legislation aims to hold businesses responsible for their environmental impact
Define Competition policy laws
Competition legislation aims to protect the interests of both consumers and businesses by restricting anti-competitive practices
Define Health and safety legislation
Health and safety legislation requires businesses to operate in a way that protects the physical and mental wellbeing of its employees and contractors, as well as its customers
Define Market size
Market size is essentially the number of customers and sellers in a particular market
