Business Environment

Question 1

Business

Answer 1

an organisation that provides goods or services to

earn profits

Question 2

Profits

Answer 2

the positive difference between a business’s revenues

and its expenses

Question 3

Dimensions of External Environment

Answer 3

• Technological
• Socio-Cultural
• Domestic Business
• Global Business
• Political-Legal
• Economic

Question 4

External Environment

Answer 4

everything outside an organisation’s boundaries

that might affect it

Question 5

Economic Systems

Answer 5

a nation’s system for allocating its resources
among its citizens, both individuals and
organisations

Question 6

Factors of Production - Definition

Answer 6

the resources that a country’s businesses use to

produce goods and services

Question 7

Factors of Production - The factors

Answer 7

• Labor
• Capital
• Entrepreneur
• Physical Resources / (assets)
• Information Resources

Question 8

Types of Economic Systems

Answer 8

• Planned Economy
• Market economy
• Mixed market economy

Question 9

Planned Economy

Answer 9

an economy that relies on a centralised government
to control all or most factors of production and to
make all or most production and allocation
decisions

Question 10

Market economy

Answer 10

individual producers and consumers control
production and allocation by creating
combinations of supply and demand

Question 11

Mixed market economy

Answer 11

features characteristics of both planned and

market economies

Question 12

Demand

Answer 12

the willingness and ability of buyers to purchase a product (a good or a service)

Question 13

Supply

Answer 13

the willingness and ability of producers to offer a good or service for sale

Question 14

Economic Indicators

Answer 14

statistics that show whether an economic system

is strengthening, weakening, or remaining stable

Question 15

Business cycle

Answer 15

the pattern of short-term ups and downs (or

expansions and contractions) in an economy

Question 16

Aggregate Output

Answer 16

the total quantity of goods and services produced
by an economic system during a given period

the primary measure of growth in the business cycle*

Question 17

Standard of Living

Answer 17

the total quantity and quality of goods and
services that people in a nation can purchase with
the currency used in their economic system

Question 18

Gross domestic product (GDP)

Answer 18

refers to the total value of all goods and services
produced within a given period by a national
economy through domestic factors of production

Question 19

Gross national product (GNP)

Answer 19

refers to the total value of all goods and services
produced by a national economy within a given
period regardless of where the factors of
production are located

Question 20

Productivity

Answer 20

the measure of economic growth that compares how
much a system produces with the resources
needed to produce it

Question 21

Balance of trade

Answer 21

the economic value of all the products that a
country exports minus the economic value of its
imported products

Question 22

National Debt

Answer 22

the amount of money the government owes its

creditors

Question 23

Stability

Answer 23

condition in which the amount of money

available in an economic system and the quantity of goods and services produced in it are growing at about the same rate

Question 24

Inflation

Answer 24

occurs when widespread price increases occur throughout an economic system

Question 25

Unemployment

Answer 25

the level of joblessness among people actively

seeking work in an economic system

Question 26

Recession

Answer 26

a period during which aggregate output, as measured

by GDP, declines

Question 27

Depression

Answer 27

a prolonged and deep recession

Question 28

Stabilisation Policy

Answer 28

government economic policy intended to smooth
out fluctuations in output and unemployment
and to stabilise prices

Question 29

Fiscal Policies

Answer 29

policies used by a government regarding how it

collects and spends revenue

Question 30

Monetary Policies

Answer 30

policies used by a government to control the size

of its money supply