business and the external economy

Question 1

what is demand-pull inflation

Answer 1

when a business’s increase their prices as a result in increases in demand

Question 2

what is cost-push inflation

Answer 2

when a business’s is forced to increase their price due to an increase in costs

Question 3

a business producing what type of product would be negativly affected by inflation

Answer 3

high quality expensive goods - this is because customers have less cash and therefore would buy cheaper lower quality goods.

Question 4

what does exchange rate effect

Answer 4

amount of foreign trade a contry has

Question 5

what does SPICED stand for

Answer 5

strong pound inport cheap export deer

Question 6

how could the government use tax to tackle inflation

Answer 6

increase tax which would decrease consumer spending meaning business’s would lower their price

Question 7

what is fiscal policy

Answer 7

how much a business collects in tax compared to how much a business spends- money put back into the economy.

Question 8

what is monetary polacy

Answer 8

how the government controls interest rates in order to control inflation