External influences on business issues Flashcards
Economic issues
Explain the business/trad cycle
(i)Growth
-GDP is rising
-low unemployment rate
-Higher living standard in country
(ii)Boom
-GDP at its highest peak
-Higher rate of inflation
-business cost will rise
(iii)Recession
-GDP fall due to high price
-cut production to still earn profit
-higher rate unemployment
(iv)Slump
-GDP at its lowest peak
-shut down of businesses
-Extremely high rate of unemployment
Explain economic objectives
Maintain economic growth
Explain th effects of reducing GDP
(i)Higher rate of unemployment
(ii)Lower standard of living
(iii)Achieve price stability
Explain the effect of inflation
(i)Lower income for people
(ii)Higher price for domestic
(iii)Low demand=Low profit
Explain the effects of unemployment
(i)GDP rate will fall
(ii)No income for people
(iii)Not able to develop country
Explain the effects of a disequilibrium in the balance of payment
(i)Depreciation of the exchange rate
(ii)Reduce income inequality
(iii)Lower output consumption
Explain government economic policies
1.Fiscal policy:it is a government policy which adjusts government spending and taxation to influence the economy
-Also known as budgetary policy
Explain the benefit of fiscal policy
(i)Reduce tax
(ii)Increase employment
(ii)More production
Explain government economic policies
- Monetary policy:it is a government policy that adjust the interest rate and foreign exchange rate to influence the demand and supply of money in the economy
Explain the benefit of monetary policy
(i) Maintain Price stability
(ii)Reduce interest rates
(iii)boost investment
Explain supply side policies
It affect supply
Explain the benefit of supply-size
(i)Privatisation:selling government organisations to private individuals
(ii)Improve training and education
(iii)Increased competition
