external influences Flashcards
what is inflation?
an increase in the general level of prices
how would inflation affect a business’ costs?
increase costs
what is shoe leather costs?
when before, to find out what store was cheapest, you would have to physically go out and look, but that’s not the case anymore, as we have the internet to compare prices
what is menu costs?
the cost of changing prices (e.g. printing out new menus would increase costs for a business)
what is hyperinflation
when inflation increases above 50%
how would hyperinflation impact a business?
it would lead to a decrease in disposable income, leading to a business’ sales dropping due to people not having enough money to spend on luxuries
how would uncertainty affect a business owners decisions?
it would lead to owners feeling less confident, leading to them making less investments
how does uncertainty affect a business?
it would lead to owners feeling less confident, leading to them making less investments
how does inflation affect borrowing?
it would increase borrowing
