3.7.5

Question 1

What are the 4 stages in the GDP cycle?

Answer 1

Boom
Recession
Slump
Recovery

Question 2

What does boom mean?

Answer 2

High rates of economic growth and economy

Question 3

Name 3 features of the boom period

Answer 3

1. High profit
2. Low employment
3. High inflation

Question 4

Name 3 impacts the boom period has on strategic and functional decisions.

Answer 4

1. Strategic decisions for market development
2. Functional decision for increased recruitment
3. Due to economies of scale, they look for efficiency and cost reduction opportunities

Question 5

What does recession mean?

Answer 5

Output starts to fall, growth declines

Question 6

Name 3 features of the recession period

Answer 6

1. Production declines as demand falls
2. Governments use policies to stimulate growth
3. Consumer/business confidence starts to fall

Question 7

Name 3 impacts the recession period has on strategic and functional decisions.

Answer 7

1. Expansion plans are ‘shelved’
2. Market penetration strategies become more attractive due to low risk
3. Functions try to increase efficiency and reduce costs. E.g flexible working

Question 8

What does slump mean?

Answer 8

Prolonged period of economic decline

Question 9

Name 3 features of the slump period

Answer 9

1. High levels of unemployment
2. Low interest rates
3. Low levels of investment and spending

Question 10

Name 3 impacts the slump period has on strategic and functional decisions.

Answer 10

1. Adopting a rationalisation strategy
2. Functional decision to make redundancies, scale down production and capacity
3. Can reduce prices and focus on the mist profitable areas of the portfolio

Question 11

What does recover mean?

Answer 11

Economy starts to pick up after a period of decline

Question 12

Name 3 features of the recovery period

Answer 12

1. Increasing customer confidence
2. Starting to invest and employing
3. Spare capacity is used up

Question 13

Name 3 impacts the recovery period has on strategic and functional decisions.

Answer 13

1. New business starts iOS emerge
2. Businesses invest in risks
3. Functional decisions focus on increased productivity (training)

Question 14

Define GDP

Answer 14

Gross Domestic Product

The value of the countries total value of goods and services

Question 15

Define exchange rates

Answer 15

The price of one currency expressed in another term

Question 16

During currency

Answer 16

It is a system of money in general in a particular country

Question 17

Define PED

Answer 17

Price Elasticity of Demand

Measures the sensitivity of demand to a change in its price

Question 18

If the pound appreciates then what happens to the price of UK exports (in foreign currency)?

Answer 18

It will increase

Question 19

If the pound depreciates then what happens to the price of UK exports (in foreign currency)?

Answer 19

It will fall

Question 20

If the pound appreciates then what happens to the price imports (in pound)?

Answer 20

It will fall

Question 21

If the pound depreciates then what happens to the price imports (in pound)?

Answer 21

Increases

Question 22

What uncertainty is associated with changes in exchange rates?

Answer 22

1. Uncertainties over revenue
2. Uncertainties over number of sales
3. Uncertainties over competitor responses