2.5.1 - Economic Influences Flashcards
What does a business cycle show?
Fluctuations in the level of economic activities
How is economic activity measured?
By GDP (Gross Domestic Product)
What is Gross Domestic Product?
The total value of a country’s output in a year
What is inflation?
The general rise in prices or a fall in the value of money
What does rate of inflation show?
How prices have changed based on the same period a year earlier
What is Retail Price Index?
A measurement of a basket of goods and services representative of what people buy in the UK
What is Consumer Price Index?
Similar to RPI but excludes housing costs
How do fluctuations in the economic environment affect both businesses and consumers?
Their confidence and its ability and willingness to spend
What does real GDP take into account?
Inflation
What is appreciation?
An increase in the value of a currency which means it’s worth more
What is a depreciation?
A decrease in the value of money which means it is worth less
What is taxation?
The process of imposing charges on businesses and individuals by the government
What is government spending?
The expenditure by the government on supplying goods and services to achieve economic and political objectives
How do shocks affect the microeconomic environment?
Affect of individual consumers and suppliers
How do shocks affect the macroeconomic environment?
Affects the actions of the economy as a whole
