Theme 2 Section 10 External Influences

Question 1

Interest Rates

Answer 1

Cost of borrowing return on savings.

Question 2

Inflation

Answer 2

Overall increase in price of goods, services.

Question 3

Demand-Pull Inflation

Answer 3

Too much demand, increase in disposable income, can’t supply goods quickly, price increases.

Question 4

Cost-Push Inflation

Answer 4

Rising costs push up prices, wages increase, prices do too.

Question 5

Deflation

Answer 5

Overall decrease in goods/services, not enough demand, reduce prices.

Question 6

Consumer Price Index and Formula

Answer 6

Measure inflation in a country, index numbers to track changes in average cost.
Average Value of basket/Base value of basket x 100

Question 7

Average Value of Basket Formula

Answer 7

Index Number/100 x Base value of basket

Question 8

Exchange Rate

Answer 8

Value of one currency in another.

Question 9

Exchange Rate €1.41 to £1, £47 to euros

Answer 9

£47 x 1.4 = €66.27

Question 10

Exchange Rate €1.41 to £1, €320 to pounds

Answer 10

€320 ÷1.41 = £226.95

Question 11

Comparing Exchange Rates and Formula

Answer 11

Different Base Rate, change of staring value 100, easier to compare rates.
Exchange Rate/Base change Rate x 100

Question 12

Government Spending

Answer 12

Influencing economy, social services, health, controlled expenditure welfare benefits, more money (or less) to spend, demand goes up (or down).

Question 13

Taxation Rates Affecting Economic Activity

Answer 13

High Tax Rates reduce consumer disposable income, spend less, reduce business turnover,low tax rates make bigger profits.

Question 14

Gross Domestic Product

Answer 14

Measure of value of all final products in a country.

Question 15

Business Cycle Diagram

Answer 15

Boom, GDP is high, capacity reaches maximum.
Recession, income, demand goes down.
Slump, GDP is low, high unemployment.
Recovery (upswing) production, employment increases.
Income elasticity of demand,(luxury)shoot up in recovery, dives down unto recession.

Question 16

Changes In Business Cycle

Answer 16

Booms, raise prices, increases profit, slows down demand.
Recession, redundant, save wage costs, increase capacity.
Local Recession, market goods in different area.
National Recession, market goods overseas.

Question 17

Microeconomy

Answer 17

Individual consumers and firms, make up specific market

Question 18

Macroeconomy

Answer 18

Economy as a whole (businesses, consumers).

Question 19

Microeconomic uncertainty

Answer 19

New competitor, uncertainty over customers
Shortage, raw materials, supplier change prices, affect costs.

Question 20

Macroeconomy Uncertainty

Answer 20

Change in government, uncertainty over spending
Leaving Trade Agreement, future exchange rates.

Question 21

Trade Descriptions Act (1968)

Answer 21

Don’t mislead consumers with false descriptions on packaging/advertising material.

Question 22

Sale of Goods Act (1979)

Answer 22

Goods must be fit for purpose, satisfactory quality.

Question 23

Consumer Protection Act (1987)

Answer 23

New Consumer goods must be safe, sofa, chair fire resistant.

Question 24

Data Protection Act (2018)

Answer 24

stops misuse of data, holding onto customer data, specified purpose.

Question 25

Climate Change Act

Answer 25

Report to Greenhouse gas emissions in annual reports. If made public businesses reduce them.

Question 26

Environment Agency

Answer 26

Protect/Improve environment, regulate businesses that release pollutants in water/land.
Pollution into air, local authorities.

Question 27

LandFill Tax (1966)

Answer 27

Reduce amount of waste dumped into landfill sites.

Question 28

Fair Competition

Answer 28

Provide good quality products, reasonable price.

Question 29

Competition Ac (1998)

Answer 29

Prevent businesses breaking competition laws, if so prosecuted or fined.

Question 30

Equality Act 2010

Answer 30

Protest employees from discrimination age,,gender, race (protected characteristics.

Question 31

Direct Discrimination

Answer 31

Treating less favourably , protected characteristic, disability or gender.

Question 32

Indirect Discrimination

Answer 32

Treated the same, worse effect on one group, not wearing head coverings, against religion.

Question 33

Recruitment

Answer 33

Justify who to employ without discriminating.

Question 34

Pay

Answer 34

Male and Female workers same pay for equal value work.

Question 35

Promotions and Redundancies

Answer 35

Everyone should have same opportunity to get promoted.
Can’t deliberately select staff to make redundant, disabled.

Question 36

Employment Tribunal

Answer 36

Employees feel been treated unfairly by employers, create a case, employer may pay compensation, job back.

Question 37

National Living Wage

Answer 37

Controversial, lower than independently calculated living wage, employers pay this, increases motivation.

Question 38

European Working Time Directive

Answer 38

Full-Time workers 28 days of paid holiday per year, bank holidays.

Question 39

Health and Safety at Work Act (1974)

Answer 39

Safe working environment, electrical equipment, machinery safe.

Question 40

Health and Safety Executive

Answer 40

Inspecting, reinforcing health and safety years, construction company providing barriers.

Question 41

High Competitive Market for Business

Answer 41

May lose customers avoid by, spend more by improving products.

Question 42

High Competitive Market for Customers

Answer 42

New and Innovative customers products, reduce prices of existing products.

Question 43

Perfect competition

Answer 43

Firms producing identical products, similar price, keep prices low but high quality, keep customers.

Question 44

Oligopoly

Answer 44

Small number of large firms, marketing, brand image, high marketing costs. Apples IOS,Google Android. similar expensive prices.

Question 45

Monopoly

Answer 45

One business has full control , no competition. Increase prices, demand doesn’t decrease, marketing costs low.

Question 46

Market Size

Answer 46

Number of buyers and number of sellers within a market.