Buisness unit 6

Question 1

definition of GDP

Answer 1

gross domestic product (the total value of output of goods and services in a country in a year

Question 2

what is growth (in a GDP graph)

Answer 2

GDP s rising and unemployment is falling

Question 3

what is boom (in a GDP graph)

Answer 3

GDP is very high unemployment is low meaning increased demand for goods and services buisness will always want to increase output but will struggle to survive

Question 4

what is slump (in a GDP graph)

Answer 4

GDP is falling greatly. there is a very high level of unemployment and demand is low. business will struggle to survive

Question 5

what is recession (in a GDP graph)

Answer 5

GDP is falling. unemployment is high and lots of business will face lower demand

Question 6

the impact on the business if unemployment is high

Answer 6

• people’s income levels will be lower, and demands for business goods and services will decrease. but easy to recruit workers

Question 6

the impact on the business if inflation is high

Answer 6

• business costs will increase
• less disposable income left for unessential goods
• demand will decrease for business that sell unessential products

Question 7

what is inflation

Answer 7

the increase in the average price of good and services over time

Question 8

the impact on the business if GDP is lower

Answer 8

• unemployment is higher and so there is less demand for goods and services, people dont have the money to buy the expensive luxury products
  -easy to find workers

Question 8

what are the government economic objectives (4)

Answer 8

• low inflation
• low unemployment
• economic growth
• balance of payments (having more exports that imports into the country)

Question 9

what are the main ways the government can influence the economy (3)

Answer 9

• changing taxes (known as fiscal policy)
• changing government spending
• changing interest rates (known as monetary policy)