THEME 2 :SECTION 5 (EXTERNAL INFLUENCE) Flashcards
Define inflation
An overall increase in the price of good in an economy
Define the term CPI and why it is important
CPI picks out hundreds of the most brought goods/services by UK households and tracks a ‘basket’ of items to see If they’re changing in price. They will measure the basket as a whole and measure how it has changed compared to the last measurement.
-The CPI gives the government, businesses, and citizens an idea about price changes in the economy and can act as a guide in order to make informed decisions about the economy.
What are exchange rates
- The value of one currency compared to another currency
What effects does appreciation have on a business?
Strong Pound Imports Cheap Exports Dear
What effects does depreciation have on a business?
Weak Pound Imports Dear Exports Cheap
Define the term interest rates
The costs of borrowing or return on savings.
What are the three main types of government spending?
- Welfare (benefits etc.)
- Public services (NHS)
- State investment
What is the three main types of taxation?
- personal
- business
- spending
What are the aspects of the business cycle and what do they mean?
- BOOM = Production reaches maximum capacity but there are shortages and price increases
- RECESSION = Income starts to go down and demand goes down
- SLUMP =Factories close/ redundancies
- RECOVERY = An upswing period, production increases, employment increases. Will lead to a boom.
What are the 3 main types of competition a market might face?
- perfect
- oligopoly
- monopoly
What is the market size?
The number of buyers and sellers within a market
How do you convert between currencies?
- To convert from a double unit to a single, you will divide by the exchange rate
- To convert from a single unit currency to a double, you will multiply by the exchange rate.
What laws and legislation could have an effect on a business?
- consumer protection
- employee protection
- environmental protection
- competition policies
- environmental legislation
- health and safety policies