A22 Flashcards
Macro Economics
The study of how the whole economy works.
Mixed Economy
An economic system that allows both the state and market
mechanism to allocate resources, e.g. the UK has a mixed
economy.
Business Cycle
A measure of the regular fluctuations in the level of economic
activity.
Boom
The stage when an economy is at the peak of activity.
Recession
Income and output begin to fall and business confidence is
reduced.
Slump
The lowest point in the trade cycle – production is low,
businesses close and unemployment is high
Recovery
At this stage income will start to rise and business output will
increase, firms will invest more, consumers will start to increase
spending and businesses will start to recruit new workers.
Fiscal Policy
A policy designed to manage the level of aggregate demand in
the economy by changing the level of government spending or
taxation.
Direct Taxes
These are levied directly on individuals or businesses In the
general sense, a direct tax is one paid directly to the government
by the persons on whom it is imposed. Examples include
income taxes and corporate taxes.
Indirect Taxes
These are levied on spending on goods and services. E.g. VAT.
Monetary Policy
A policy designed to control the supply of money in the
economy.
Economic Growth
An indication of the change in output or income within the
economy.
GDP
Gross Domestic Product - a measure of economic activity but it
does not include net property income from abroad.
GNP
Gross National Product – a measure of the amount of income
generated as a result of a country’s economic activity.
Sustainable Growth
Growth which continues year on year.
Exchange Rates
The price of one currency in relation to another.
Unemployment
The number of people who are of working age but not in a job.
Seasonal Unemployment
Refers to people who work during a particular season e.g. the
Christmas period and then they are paid off once the season is
over.
Cyclical
Unemployment
Refers to unemployment that fluctuates with the business cycle.
Frictional Unemployment
This is caused by people moving from one job to another.
Structural Unemployment
This is caused by changes in the structure of the economy e.g.
decline of heavy industries in N.I.
Inflation
A continuing tendency for prices to rise.
Cost-Push Inflation
This inflation occurs when production costs rise and businesses
pass this onto consumers in the form of higher prices.
Demand-Pull Inflation
This inflation occurs when there is excessive spending in the
economy
Balance Of Payments
An accounting record of all monetary transactions between a
country and the rest of the world
Current Balance
The difference between the value of money entering and leaving a country as a result of trade in goods services and transfers.
Imports
Goods and services purchased from abroad for use in a particular country.
Exports
Goods and services sold by a particular country to another
country.
Globalisation
Refers to the growing integration of the world’s economy.
Multi-Nationals
A company which owns or controls production or service
facilities outside the country in which it is based.
Trade Barriers
The use of controls to prevent free movement of goods between
countries.
Tariff
A tax levied upon imports.
Quota
A limit placed on the number of particular categories of goods
allowed to enter countries.
Excise Duties
Taxes levied on fuel, alcohol, tobacco and betting.
SEM
Single European Market – an agreement by EU countries to
remove all trade barriers.
Euro-zone
Member countries of the EU who have adopted the Euro as
their currency.
Emerging Markets
Emerging markets are nations with social or business activity in
the process of rapid growth and industrialisation. E.g. India
Business Ethics
This is the influence of values and beliefs upon the conduct and
operation of business activities e.g. Fair Trade, Animal Welfare.
CSR
Corporate Social Responsibility. The willingness of a business to
accept responsibility for its actions and their impact on
stakeholders.
Social Audit
The process used by a business to assess the impact of its
activities on stakeholders.
Corporate Culture
The values, beliefs and norms that are shared by people and
groups in any organisation.
Organisational Culture
This is the way a business does things and the way that people in
the business expect things to be done. It shapes staff behaviour
and attitude and how they make decisions.
Power Culture
Refers to organisations where decision making is limited to
one/or a small number of people.
Role Culture
Refers to bureaucratic firms where authority is defined by job
title.
Person Culture
Refers to a loose organisation of individual workers e.g.
professional partnerships such as accountants or solicitors.
Task Culture
This places an emphasis on tasks and getting things done.
Group Think
This occurs when a group makes faulty decisions because group
pressure leads to a deterioration of “mental efficiency, reality,
testing and moral judgement”.
External Environment
The factors outside a business that may influence its
decisions
Pressure Groups
Groups of people without direct political power who seek to influence decisions makers in business and society.
Demography
The study of population in relation to its size, structure and
distribution.
Primary Sector
Businesses engaged in the extraction of raw materials from
land and sea.
Secondary Sector
Businesses engaged in manufacturing and construction who
transform raw materials into finished goods.
Tertiary Sector
Businesses engaged in the providing commercial and personal
services.
Waste Management
The way in which businesses deal with the problems of waste
materials
Organic Growth
Growth achieved through the expansion of current business
activity.
Merger
The joining together of two businesses.
Takeover/Acquisition
The purchase of one business by another.
Horizontal Integration
The merging of firms that are in the same line of business and
at the same stage.
Backward Vertical Integration
Merging with a firm who is engaged in the previous stage of
production.
Forward Vertical Integration
Merging with a firm who is engaged in the next stage of
production.
Lateral Integration
The merging of firms involved in the production of similar
goods but who are not in competition with each other.
Conglomerate/
Diversification Merger
The merging of firms involved in completely different
business activities.
Joint Venture
Two firms who share the cost, responsibility and profits of a
business activity.
Management/Employee Buyout
The sale of a business to existing managing team/employees.
