Section 6 -- External influences on business activity

Question 1

define ‘inflation’

Answer 1

increase in the average price level of goods and services over time

Question 2

define ‘unemployment’

Answer 2

when people who are willing to work are unable to find a job

Question 3

define ‘economic growth’

Answer 3

when a countrys GDP increase, more goods and services were produced compared to previous years

Question 4

define ‘balance of payments’

Answer 4

records the difference between a countrys exports and imports

Question 5

define ‘real income’

Answer 5

value of income and it falls when prices rise faster than money income

Question 6

define ‘gross domestic product (GDP)’

Answer 6

total value of output of goods and services in a country in one year

Question 7

define ‘recession’

Answer 7

period of falling GDP

Question 8

define ‘exports’

Answer 8

goods and services sold from one country to other countrys

Question 9

define ‘imports’

Answer 9

goods and services bought in by one country from other countries

Question 10

define ‘exchange rate’

Answer 10

price of one currency in terms of another

Question 11

define ‘exchange rate depreciation’

Answer 11

fall of value of a currency compared with other currencies

Question 12

define ‘fiscal policy’

Answer 12

change by the government in tax rates or public-sector spending

Question 13

define ‘direct taxes’

Answer 13

taxes paid directly from incomes

Question 14

define ‘indirect taxes

Answer 14

taxes added the prices of goods sold

Question 15

define ‘disposable income’

Answer 15

level of income taxpayer has after paying income tax

Question 16

define ‘import tariff’

Answer 16

tax on an imported product

Question 17

define ‘import quota’

Answer 17

physical limit to the quantity of a product that can be imported

Question 18

define ‘monetary policy’

Answer 18

change in interest rates by the government or central bank

Question 19

define ‘supply side policies’

Answer 19

policies to increase the competitiveness of industries in an economy against those from other countries

Question 20

define ‘exchange rate appreciation’

Answer 20

rise in the value of a currency compared to other currencies

Question 21

define ‘social responsibility’

Answer 21

business decision benefits stakeholders other than shareholders

Question 22

define ‘environment’

Answer 22

natural world where raw materials are extracted from

Question 23

define ‘private costs’

Answer 23

activity of costs paid for by business

Question 24

define ‘private benefits’

Answer 24

activity are the gains to a business

Question 25

define ‘external costs’

Answer 25

costs paid for by the rest of society

Question 26

define ‘external benefits’

Answer 26

gains to the rest of society

Question 27

define ‘sustainable development’

Answer 27

development which does not put at risk the living standards of future generations

Question 28

define ‘sustainable production methods’

Answer 28

those that do minimum damage to the environment

Question 29

define ‘pressure groups’

Answer 29

made up of people who want to change business (or government) decisions and they take action by forming consumer boycotts

Question 30

define ‘consumer boycott’

Answer 30

when consumers decide not to buy products from businesses that do not act in a socially responsible way

Question 31

define ‘ethical decision’

Answer 31

based on moral code sometimes referred to as ‘doing the right thing’

Question 32

define ‘globalisation’

Answer 32

increases in worldwide trade and movement of people and capital between countries

Question 33

define ‘free trade agreements’

Answer 33

countries agree to trade imports/exports with no barriers such as tariffs and quotas

Question 34

define ‘import quota’

Answer 34

restriction on the quantity of a product that can be imported

Question 35

define ‘protectionism’

Answer 35

when a government protects domestic firms from foreign competition using tariffs and quotas

Question 36

define ‘multinational businesses’

Answer 36

factories, production or services operation in more than one country

Question 37

define ‘exchange rate’

Answer 37

price of one currency in terms of another

Question 38

define ‘currency appreciation’

Answer 38

when value of a currency rises

Question 39

define ‘currency depreciation’

Answer 39

when the value of a currency falls

Question 40

define ‘common currency’

Answer 40

group of countries agree to use same currency

Question 41

define ‘economic union’

Answer 41

agreements between countries to trade freely with one another and have common economic institutions