2.5 key terms

Question 1

Define economic climate

Answer 1

The general state of the economy - whether good or bad

Question 2

Define Gross Domestic Product (GDP)

Answer 2

A measure of a country’s total output of goods and services over a period of time.

Question 3

Define recession

Answer 3

A significant decline in real economic activity spread across the economy.

Question 4

Define the business cycle

Answer 4

Comprised of concerted cyclical upswings and down swings in the broad measures of economic activity - output, employment, income and sales

Question 5

Define exchange rates

Answer 5

The price of one currency expressed in terms of another. The exchange rates change owing to the fluctuation in demand for a currency, economic growth and interest rates

Question 6

Define inflation

Answer 6

The general rise in prices over time.

Question 7

Define interest rates

Answer 7

The proportion of a loan that is charged as interest to the borrower.

Question 8

Define real incomes

Answer 8

the amount of disposable income available to consumers

Question 9

What is the ‘Basket of Goods’?

Answer 9

A constant set of general goods produced in an economy whose prices are tracked over time.

Question 10

Summarise consumer protection legislation

Answer 10

Laws regulating the information on product packaging and ensuring a fair price and good quality. This ensures that businesses do not exploit customers.

Question 11

Example of consumer protection legislation

Answer 11

The Sale of Goods Act (1974) - requires goods to be fit for purpose and of satisfactory quality

Question 12

Summarise competition policy legislation

Answer 12

Aims to restrict anti-competitive practices such as: abuse of market power and businesses working together to manipulate the market and limit competition

Question 13

Summarise employee legislation

Answer 13

Labour laws aiming to prevent exploitation of workers. They legislate for issues such as pay, working conditions and grievances.

Question 14

Example of employee legislation

Answer 14

National Minimum Wage Act (1998) - sets out the amount of pay a worker is entitled to per hour. This is a legal requirement for employers to pay employees the national minimum wage

Question 15

Summarise environmental legislation

Answer 15

Aims to make businesses responsible for any environmental damage they cause by their production processes, including pollution, destruction of wildlife, resource depletion etc

Question 16

Example of environmental legislation

Answer 16

The Environmental Protection Act (1990) - focuses on improved control of pollution to the air, water and land and regulates the management of waste and the control of emissions

Question 17

Summarise health and safety legislation

Answer 17

Ensures that businesses have to provide a safe and healthy workplace and facilities for customers and employees alike. E.g. maintaining temperature and noise level, providing adequate rest breaks, guaranteeing hygiene levels etc.

Question 18

Example of health and safety legislation

Answer 18

Health and safety at work Act (1974) - provide adequate training of staff, safe working environment etc.