BS3- External Influences - Steeple (economic 2) Flashcards
What is meant by interest rates
It is the amount you will gain by saving or the amount extra you will have to pay back when borrowing
The banks of England increases interest rates. How are home owners affected and what are the resulting impacts on business
If they have a mortgage on their house then they may not have the funds to spend money else where so due to having to pay more each month. Business will then sell less so suffer because of it.
The Bank of England decreases interest rates. Explain why a business may now decide to invest in a new process.
As when they get a loan for the funding they wont have to be paying back as much as the interest rate is low.
The Bank of England decreases interest rates. Explain why business sales may now increase.
People who save money are no longer saving they are spending as there is no benefit to saving as they don’t get a good return.
The Bank of England increase interest rates to reduce inflation. Explain why increasing interest rates helps to control inflation.
As this will discourage borrowing and encouraging saving
Explain how an increase in the rate of interest may result in the strengthening of the pound.
It will keep more money in the uk economy and attract foren investors
Definition of they key term unemployment
Not having work but still looking and trying to get a job
State three reasons that the government wants a low level of unemployment
It means there are more tax payers
Will mean less people on benefits
Add to the gdp
Explain the key term balance of trade
Difference between the value of exports and imports. If exports exceed imports, there is a balance of trade surplus; if imports exceed exports, there is a balance of trade deficit.
Give a balance of trade which would result in a deficit
Imports £80b- exports £50b = trade deficit £30b
Identify two strategies that the government could implement to achieve a balance of trade surplus.
They can put tariffs on imports so that less people import goods
Make it easier to export products
