the economy and business Flashcards

1
Q

what is levy

A

a tax on a particular product or service

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2
Q

key factors influencing business activity

A

unemployment
changing levels of consumer income
inflation
government taxation
changes in interest rates
changes in exchange rates

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3
Q

unemployment

A

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

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4
Q

changing levels of consumer income

A

higher = more likely to spend, increasing sales
lower= businesses may experience a decline in demand

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5
Q

inflation (economic climate)

A

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

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6
Q

changes in interest rates

A

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

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7
Q

government taxation

A

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

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8
Q

changes in exchange rates

A

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

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