the economy and business Flashcards
what is levy
a tax on a particular product or service
key factors influencing business activity
unemployment
changing levels of consumer income
inflation
government taxation
changes in interest rates
changes in exchange rates
unemployment
leads to lower consumer spending, fewer people have regular income, negatively affect business
low unemployment however means more people employed, higher DISPOSABE INCOME which can boost demand for goods/services
changing levels of consumer income
higher = more likely to spend, increasing sales
lower= businesses may experience a decline in demand
inflation (economic climate)
leads to higher prices for goods and services, if too much, consumers may cut back on spending, lowering business sales
increased production costs, affects profitability
changes in interest rates
borrowing is more expensive for businesses and consumers, reduce spending and investment in economy, decreased demand
lower interest rates make borrowing cheaper, stimulating spending + investment, benefiting businesses that rely on loans
government taxation
raise business costs (higher VAT or corporation tax), reducing profits, may need to increase prices or reduce costs somehow
tax cuts can allow businesses with more capital to invest in expansion or reduce prices for consumers
changes in exchange rates
weaker currency= more expensive imports
stronger currency= makes exports for foreign buyers expensive
weaker domestic currency may increase demand abroad as their goods become more affordable for foreign customers