2.5.1 Economic influences KEYWORDS

Question 1

inflation

Answer 1

increase in general price level

% rate at which average prices rise during year in whole UK economy

Question 2

consumer price index

Answer 2

CPI

method used to measure inflation

Question 3

exchange rate

Answer 3

price of 1 currency in terms of another

rate at which one currency can be swapped for another

Question 4

appreciation

Answer 4

increase in exchange rate
rate at which one currency can be swapped for another increases
currency strengthened

Question 5

depreciation

Answer 5

decrease in exchange rate
rate at which one currency can be swapped for another decreases
currency weakened

Question 6

interest rates

Answer 6

cost of borrowing and reward for saving

Question 7

taxation

Answer 7

amount paid to government

Question 8

corporation tax

Answer 8

tax on business profits (20% in UK)

Question 9

business rates

Answer 9

tax on businesses properties

Question 10

VAT

Answer 10

tax on business sales revenue

Question 11

income tax

Answer 11

tax on consumer income

Question 12

government spending

Answer 12

money spent by government on schools, NHS, defenses etc

Question 13

budget deficit

Answer 13

government spend more than the receive in tax

Question 14

economic cycle

Answer 14

economy moves from boom to recession over time

Question 15

recession

Answer 15

2 consecutive quarters (6 months) of negative economic growth
negative economy growth, unemployment high, inflation low

Question 16

boom

Answer 16

economy growing rapidly (likely to coincide with high inflation)
high economic growth, employment

Question 17

recovery

Answer 17

slow but positive growth period immediately following a recession

Question 18

business cycle

Answer 18

pattern of economic growth

boom -> recession -> recovery -> growth an economy follows