THEME 2 :SECTION 5 (EXTERNAL INFLUENCE) Flashcards

1
Q

Define inflation

A

An overall increase in the price of good in an economy

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2
Q

Define the term CPI and why it is important

A

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.

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3
Q

What are exchange rates

A
  • The value of one currency compared to another currency
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4
Q

What effects does appreciation have on a business?

A
Strong
Pound
Imports 
Cheap
Exports
Dear
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5
Q

What effects does depreciation have on a business?

A
Weak
Pound
Imports
Dear
Exports
Cheap
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6
Q

Define the term interest rates

A

The costs of borrowing or return on savings.

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7
Q

What are the three main types of government spending?

A
  • Welfare (benefits etc.)
  • Public services (NHS)
  • State investment
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8
Q

What is the three main types of taxation?

A
  • personal
  • business
  • spending
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9
Q

What are the aspects of the business cycle and what do they mean?

A
  • 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.
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10
Q

What are the 3 main types of competition a market might face?

A
  • perfect
  • oligopoly
  • monopoly
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11
Q

What is the market size?

A

The number of buyers and sellers within a market

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12
Q

How do you convert between currencies?

A
  • 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.
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13
Q

What laws and legislation could have an effect on a business?

A
  • consumer protection
  • employee protection
  • environmental protection
  • competition policies
  • environmental legislation
  • health and safety policies
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