3.7.5 Analysing the external environment to assess opportunities and threats: economic change Flashcards
What are the economic factors?
- GDP
- Taxation
- Exchange rates
- Inflation
- Discal and monetary policy
- More open trave v protectionism
What is GDP (Gross domestic products)?
A measure of economic activity (Total value of a countries output) over a given period of time.
What is the difference between GDP and real GDP?
- GDP is nominal (existing in name only)
- Real GDP means theat the effects of inflation has been removed
What is direct and indirect tax?
Taxes that firms pay in the UK
What is corporation tax?
A form of direct taxation, which is a tax on trading profits made by a business over the course of their financial year as well as any profit from investment and disposal of assets
What is value added tax?
This is a form of indirect taxation, collected by businesses for the government. It is a tax placed on the sale of goods abd services- a typer of ‘consumption tax’
What factors are included in the business cycle?
- Boom
- Recession
- Slump
- Recovery
What are some causes of the business cycle?
- Changes in business confidence
- Periods of inventory building and debuilding (christmas/halloween)
- Irregular patterns of expenditure on consumer durables
- Confidence in banking sector
What is exchange rates?
The rate between two distinct countries
What is currency demand?
Demand from currancy comes from a need to purchase the currency of a particular economy
What are the sources of demand for currency demand?
- Exports of goods
- Exports of services
- Inflows of foreign investments
- Speculative demand
- Official buying of sterling by the bank of england
What is currency supply?
Supply of curency comes from economic agents needing to demand oversea currency in exchange for their demand
What are the sources of demand for currency supply?
- Imports of goods
- Imports of services
- Outflows of foreign investments
- Speculative selling
- Official seeling of sterling by the bank of england
