2.5 keywords Flashcards
economic growth
An increase in the number of goods or services produced in an economy (GDP). Measured by GDP figure or % change in GDP.
economic influences
The economic environment consists of key economic factors such as Interest Rates, Exchange Rates, Inflation that influence the behaviour of businesses and their customers.
economic uncertainty
The economic environment is difficult to accurately predict and prone to shocks or unpredictable events.
economic variables
Fluctuations in factors outside of the business’ control that affect the state of the economy and therefore business and consumer behaviours.
exchange rates
The value of a currency in terms of another e.g. £1 : $1.50
inflation
A general rise in prices or a fall in the value of money measured by CPI or RPI and caused by demand pull or cost push factors.
the rate of inflation
Shows how prices have changed based on the same period a year earlier. It is an indication of the cost of living changing.
consumer price index
A measurement of inflation based on a ‘basket’ of goods and services representative of what people buy in the UK, excluding housing costs.
appreciation
An increase in the value of a currency. This means the currency is worth more, e.g. £1 : $1.55 to £1 : $1.60.
depreciation
A decrease in the value of a currency. This means the currency is worth less, e.g. £1 : $1.35 to £1 : $1.30.
interest rates
The price of money i.e. the cost of borrowing or the reward for saving.
taxation
A financial charge by the government on an individual or firm to control the economy e.g. to stimulate or curtail demand.
direct tax
Applies to income earned or capital gained.
indirect tax
Applies to expenditure on products.
government spending
The amount of expenditure undertaken by the government on an annual basis to achieve economic and political objectives on things such as healthcare and education.
the business cycle
Fluctuations in the level of economic activity over time measured by GDP.
employee protection
Legislation designed to safeguard employees’ rights in the workplace e.g. Equal Pay Act, Minimum Wage.
environmental protection
Legislation that helps to ensure that the production of goods and services does not have a negative impact on the environment e.g. use of recycling.
consumer protection
Laws that protect the consumer from firms with regards of the quality of goods or services sold.
legislation
Involves enacting and creating laws in order to protect individuals, firms and societies as a whole
competition policy
Legislation designed to promote healthy competition in markets leading to free and fair trade.
health and safety
The responsibility of employers to look after the health and safety of employees in the workplace.
the competitive environment
This looks at the degree of competition in the market and the buying and selling power of customers and suppliers within the market.
competition
The number of competitors that a business faces within the market.
market size
The total value or volume of sales in a market.
monopoly
Occurs when one firm dominates the market and holds 25% of market share.
oligopoly
Occurs when several firms dominate the market.
monopolistic competition
Occurs when there are many firms in the market but there is some form of product differentiation.
perfect competition
Where many firms all producing and selling similar goods.
