KK4

Question 1

Economic conditions

Answer 1

refer to the many influences that relate to economic activity in a country, region or the world and include interest rates, wages, unemployment, exchange rates and inflation.

Question 2

Expansion

Answer 2

• Increasing consumer spending
  
  • Business expectations increasingly optimistic
  • Increasing business investment
  • Sales and profits rising
    Unemployment falling

Question 3

Contraction

Answer 3

• Decreasing consumer spending
  
  • Business expectations increasingly pessimistic
  • Decreasing business investment
  • Sales and profits falling
    Unemployment rising

Question 4

peaks

Answer 4

• Wages and salaries at high levels
  
  • Business operating at full capacity
  • Sales and profits at highest levels
    Low level of unemployment

Question 5

troughs

Answer 5

• Wages and salaries at low levels
  
  • Business operating at below full capacity
  • Sales and profits at lowest levels
  • Consumer spending at lowest levels
    High levels of unemployment

Question 6

Interest rates

Answer 6

price charged for the use of money. interest rates will rise in periods of inflation and when there is more demand for credit.

Question 7

Tax rates

Answer 7

percentage of income or value of a good, service or assets paid as tax. Represents a cost for business

Question 8

Business and consumer confidence levels

Answer 8

Refers to how businesses and consumers are feeling about the economy. When consumer confidence is high, they are more likely to make purchase

Question 9

Recessionary cycle

Answer 9

Evidence of a contracting economy, consumers become more cautious, reduced spending by consumers, Cost cutting must occur

Question 10

Boom cycle

Answer 10

Evidence of an expanding economy, consumer confidence returns and spending increases, increased spending, businesses increase production rate.