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gcse business > section 6 > Flashcards

section 6 Flashcards

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1
Q

balance of payments

A

the difference between the values of export and import goods and services of a country over a year

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2
Q

government objectives

A
  • a healthy balance of payments
  • low unemployment rate
  • low inflation rate
  • economic growth
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3
Q

inflation

A

sustained increase in the country’s average price level

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4
Q

level of unemployment

A

the percentage of the population that are willing and able to work but unable to find a job

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5
Q

gross domestic product (GDP)

A

the value of all goods and services produced by a country in a year

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6
Q

the business cycle

A
  • growth
  • boom
  • recession
  • slump
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7
Q

characteristics of a growth stage

A

economy recovers or grows

  • existing businesses grow and make profits
  • falling unemployment
  • higher standard of living
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8
Q

characteristics of a boom stage

A

peak of the business cycle

  • business investments and profits are at their highest levels
  • inflation rises, high levels of demand for goods and services cause prices to rise
  • very low unemployment rates, increased wage costs for business
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9
Q

characteristics of recession stage

A

sustained reduction in GDP

  • decline in economic activity until it reaches a minimum (slump)
  • falling demand by consumers leads to falling profits
  • unemployment rises as businesses are not doing well and have to cut costs
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10
Q

characteristics of a slump stage

A

recession stage of the economy is at its worst

  • low production of goods and services, many close down
  • low demand
  • high unemployment
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11
Q

interest rate

A

the cost to a person or business of borrowing money from a lender such as a bank

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12
Q

tax

A

a charge/fee paid to the government on income, goods and services

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13
Q

how government meets economic objectives

A

through government policies

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14
Q

types of government policies

A
  • demand
  • supply
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15
Q

demand-side policies

A

fiscal policies:
- gov. income: taxes, borrowing
- gov. supply: subsidies, public services

monetary policies:
- adjusting the interest and foreign exchange rates.. to influence the demand and supply of money in the economy

expansionary= grow economy
contractionary= slow down the economy

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16
Q

supply-side policies

A
  • privatisation: selling gov. organisations to private individuals= increases efficiency= increases supply
  • improve training and education: spend more money on education so people can become more skilled= increases productivity
  • increased competition: deregulation increases competition and therefore productivity
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17
Q

direct tax

A

the tax charged on personal income or tax on the profit made by a business

  • income tax
  • corporation tax
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18
Q

indirect tax

A

the tax charged on the price of goods and services, which is added to the price of goods and services before they are bought

  • VAT
  • import tariffs
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19
Q

disposable income

A

the amount of income left for individuals after taxes have been paid

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20
Q

how business activity can affect us and our environment

A
  • pollution
  • waste
  • emission of greenhouse gases
  • use of energy
  • use of natural resources
21
Q

why businesses want to be environmentally-friendly

A
  • sense of CSR
  • better brand-image
  • consumers are becoming socially aware and are only willing to buy environmentally-friendly products
  • using non-renewable resources will raise their prices in the future
22
Q

why businesses don’t want to be environmentally friendly

A
  • expensive, reduces profits
  • firms will have to increase prices= demand falls
  • businesses claim it is the gov.’s duty to clean up
23
Q

externalities

A

costs or benefits that affect third parties not involved in the consumption or production activity causing these costs or benefits

24
Q

social cost

A

the negative impact of a business decision on society

25
Q

social benefit

A

the positive impact of a business decision on society

26
Q

cost-benefit analysis

A

analysis of the costs and benefits of a project, the focus being on the social costs and benefits

project goes ahead if social benefits outweigh social costs

27
Q

sustainable development

A

a business activity is said to be sustainable if it has a positive overall impact on the environment

28
Q

how businesses can be sustainable

A
  • use renewable sources of energy
  • used packaging made of recycled material
  • avoid unnecessary travel
  • use packaging that can be recycled or reused
29
Q

how pressure groups can make their points

A
  • boycotting, refusing to buy a business’s products and influencing over consumers to do the same
  • petitioning, making an official complaint to the gov. on an issue
  • increasing awareness
  • lobbying, attempting to influence the policy-making of the gov.
30
Q

how businesses respond to environmental pressures

A
  • using green manufacturing methods
  • reducing their use of energy
  • obeying gov. regulations
31
Q

how gov. can limit the negative effects of business activity

A

punishments:

  • penalties in the form of fines, closure of facilities and imprisonment on businesses that ignore pollution targets
  • charging a tax on the commercial use of energy
  • businesses may not be permitted to set up in some areas

incentives:

  • reward greenest companies with tax credits
  • policies that allow tax exemptions for companies using renewable sources of energy
32
Q

multinational company

A

an organisation that has operations in more than one country

33
Q

globalisation

A

the process by which countries are connected with each other because of the trade of goods and services

34
Q

reasons to become a multinational company

A
  • lower labour costs, cheaper material
  • avoiding transport costs, produce goods nearer to market
  • avoid trade barriers on imports
  • risk spreading
35
Q

barriers to trade

A
  • import quotas: restriction on the quantity of goods that can be imported into the country
  • import tariffs: taxes on imports
36
Q

trade bloc

A

a group of countries that trade with each other and are usually part of a free trade agreement

37
Q

factors that increase the pace of globalisation

A
  • migration
  • improvement in technology
  • free-trade agreements
38
Q

home country

A

the domestic country where a multinational starts its operations

39
Q

host country

A

the foreign country where a multinational sets up its operations

40
Q

tariff

A

a tax applied to the value of imported and exported goods

41
Q

quota

A

a physical limit on the quantity of goods that can be imported and exported

42
Q

why not to become a multinational country

A

host country has:

  • language barrier
  • cultural differences
  • lack of knowledge about the local market
  • strict regulations
43
Q

how multinational companies help host countries

A
  • increases choice and quality of goods and services
  • improves country’s reputation
  • increases employment opportunities
44
Q

limitations to the host country of a multinational company

A
  • increased competition for local businesses
  • environmental damage
  • exploitation of natural resources
45
Q

exchange rate

A

the rate at which one country’s currency can be exchanged for that of another

46
Q

if a currency appreciates

A

good for importers, bad for exporters

47
Q

if a currency depreciates

A

good for exporters, bad for importers

48
Q

depreciation

A

a currency is said to depreciate if the value of the currency goes down with respect to another

49
Q

appreciation

A

a currency is said to appreciate if the value of the currency increases with respect to another

gcse business (3 decks)

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