7.5 Economic Environment Flashcards
What are the seven functional decisions for the economic environment?
Taxation Fiscal Policy Monetary Policy Exchange Rates Interest Inflation GDP
What is GDP?
Measures the value of a country’s total output of goods and services over a period of time, normally one year
What is the exchange rate?
The price of one currency expressed in terms of another
What is inflation?
Rise in general price level
What is deflation?
Decrease in general price level
How is inflation measured?
CPI/RPI
What are the different taxes that businesses pay?
Corporate
Income
Excise Duties
VAT
What is quantitative easing?
Central bank buys assets, the institutions then sell those assets. Commercial banks or other financial businesses will have new money in their accounts which in turn boosts the money supply
What is forward guidance?
Influencing business confidence through predictions about interest rates etc
Name some supply side policies?
Cutting tax rates on low earners
Limiting the availability of unemployment benefit
Provision of training programs and apprenticeships
Improving education
What is privatisation?
Transferring organisations from state to the ownership and control of individuals
What is protectionism?
Protectionism is a government policy which favours the use of measures intended to prevent the free entry of imports into a country
What is globalisation?
Trend for markets to become worldwide in scope
What is an emerging economy?
An emerging economy describes a country with low incomes per head but one which is enjoying high rates of economic growth
What is the risk with emerging economies?
Economic risks - inflation etc
Political risks
Risks to brand or corporate image
