External Influences

Question 1

What are interest rates?

Answer 1

The cost of borrowing money and the reward for saving money

Question 2

What are inflation rates?

Answer 2

The rise in cost of goods and services to buy

Question 3

What is tax?

Answer 3

Monies demanded from the government so they have money to spend elsewhere e.g. on the NHS and in schools

Question 4

What are exchange rates?

Answer 4

The rate at which one currency can buy another

Question 5

What is a boom?

Answer 5

A period when the economy is growing strongly and is operating around its productive potential

Question 6

What is a recession?

Answer 6

A period when growth or output become negative for at least two quarters

Question 7

What is recovery?

Answer 7

The movement back from when the economy is operating below its productive potential to a point where it is at its productive potential

Question 8

What is a slump?

Answer 8

A period where there is a particularly deep and long fall in output

Question 9

What is a base rate?

Answer 9

A rate encouraged to banks to charge based on the current economy
-current base rate is 5.25%

Question 10

What does it mean when a currency appreciates?

Answer 10

It is getting stronger and goes up in value

Question 11

What does it mean when a currency depreciates?

Answer 11

It is getting weaker and decreases in value

Question 12

How do exchange rates affect business?

Answer 12

-Increase or decrease the price of a product sold abroad
-Change the price of imported raw materials

Question 13

What does CPI mean?

Answer 13

Consumer Price Index

Question 14

What does RPI mean?

Answer 14

Retail Price Index

Question 15

What is demand pull?

Answer 15

Buyers want to buy more than sellers can actually produce, therefore sellers increase the price
-demand pulls the price up

Question 16

What is cost push?

Answer 16

Business costs rise and sellers must increase prices
-costs push the prices higher

Question 17

Why can inflation be good?

Answer 17

-A sign that the economy is growing
-A lack of inflation indicates that the economy is weakening which could lead to a recession

Question 18

What is the fiscal policy?

Answer 18

The use of government mechanisms in revenue collections
-the government can raise direct taxes leading to a reduction in disposable income
-the government can reduce its own spending on the public

Question 19

What is the monetary policy?

Answer 19

Actions from the Bank of England to control the size and rate of growth

Question 20

What does fiscal mean?

Answer 20

Tax

Question 21

What is direct tax?

Answer 21

Collected by inland revenue
e.g council tax, income tax, business and corporation tax

Question 22

What is indirect tax?

Answer 22

Collected by the customs and excise
e.g vat, fuel, wine, spirits and beer

Question 23

What are the types of tax?

Answer 23

-Income tax = workers pay income tax and national insurance contributions, this affects how much pay workers take home
-Corporation tax = businesses pay corporation tax on their profits
-VAT = a tax placed on all goods we buy except food and children’s clothing, this is 20%
-Excise duties = these are specific taxes charged on certain goods e.g alcohol, fuel, tobacco

Question 24

What is the consumer protection act?

Answer 24

Protects the public by:
-prohibiting the manufacturer to supply unsafe goods
-making the manufacturer responsible for the damage it has caused
-prohibiting misleading price indications

Question 25

What are unfair trading regulations?

Answer 25

-Makes it an offence for a trader to make false or misleading statements about goods -Cannot use aggressive door to door selling -Covers a false trading description on any goods

Question 26

What is the data protection act?

Answer 26

Controls the use of consumers information -businesses must store data securely and avoid theft -prevents customers details being sold

Question 27

What are statutory rights?

Answer 27

Legal rights based on laws passed by parliament

Question 28

What is a contract of employment?

Answer 28

The agreement made between the employer and the employee -it includes 'custom and practise agreements' which is how things are done in the workplace

Question 29

What is the employment rights act?

Answer 29

-States the duties and rights of the employer and the employee -Includes the right to maternity and paternity leave -Includes details about the termination of employment

Question 30

What is a working time directive?

Answer 30

Overall puts a limit on the number of hours which should be worked in a week -Limit of 48 hours per week, unless workers choose to work more -Night workers receive free health assessments, 11 hours of rest -At least one day off a week -Right to 4 weeks paid time off

Question 31

What is national minimum wage?

Answer 31

A statutory right to be paid a certain amount of pay for the work performed

Question 32

What is uncertainty?

Answer 32

A future that we have little to no knowledge of including potential outcomes and risks

Question 33

How can we reduce uncertainty?

Answer 33

-Research = provides information which can reduce uncertainty by providing up to date information -Contracts = makes sure that potential fluctuating factors in the business are controlled to keep them predictable for a period of time -Diversification = diverse the product portfolio for when uncertainty happens within a market

Question 34

What is the environmental protection act?

Answer 34

The act defines the fundamental structure and authority for waste management and control emissions into the environment -businesses must recycle, have a duty of care when dealing with waste

Question 35

What is the competition act?

Answer 35

It makes sure there are anti competitive agreements and abuse of dominant market position -aims to prevent price fixing -investigates competitive mergers -aims to promote competition which benefits the customers

Question 36

What is the health and safety at work act?

Answer 36

Employers must protect the health, safety and welfare of all their employees while at work -gives the employers responsibility about the employees -aims to raise the standard of safety and health for all the individuals at work -can be taken to court if businesses fail to comply