Unit 1 Investigating Small Business : Understanding External Influences

Question 1

Commodities

Answer 1

Raw materials such as coal, oil, copper, iron ore, wheat and soya.

Question 2

Commodity markets

Answer 2

Where buyers and sellers meet to exchange commodities – often these are international, organised markets, for example the London Metal Exchange and the New York Mercantile Exchange.

Question 3

Demand

Answer 3

The amount consumers are willing and able to buy at any given price.

Question 4

Supply

Answer 4

The amount sellers are willing to offer for sale at any given price.

Question 5

Shortage

Answer 5

When the demand for a good or service is greater than the supply. When a shortage exists, prices will tend to rise.

Question 6

Surplus

Answer 6

When the demand for a good or service is less that the available supply. When a surplus exists, prices will tend to fall.

Question 7

Goods market

Answer 7

The market for everyday products such as clothes, food, petrol, going to the cinema, a DVD etc.

Question 8

Interest Rate

Answer 8

The percentage reward or payment over a period of time that is given to savers or paid by borrowers on savings or loans.

Question 9

Bank of England

Answer 9

The central bank for the UK. Its role is to monitor the banking system and to be a banker to the banks. It is responsible for setting interest rates in the UK.

Question 10

Variable interest rates

Answer 10

Interest rates that can change over the lifetime of a loan depending on what is happening to other interest rates in the economy.

Question 11

Fixed interest rates

Answer 11

Interest rates that stay the same over an agreed period of a loan.

Question 12

Exchange rate

Answer 12

The exchange rate is the price of buying a foreign currency. It tells you how much of the foreign currency you will get for every pound or how many pounds you have to give up to acquire a foreign currency.

Question 13

Export

Answer 13

An export is the sale of a good or service to a foreign buyer that leads to a flow of money into the UK. The foreign buyer will have to change their currency into pounds to complete the purchase.

Question 14

Import

Answer 14

An import is the purchase of a good or service from a foreign business that leads to a flow of money out of the UK. The UK buyer will have to change pounds into the seller’s currency to make the transaction.

Question 15

Economic activity

Answer 15

The amount of buying and selling that takes place in a period of time.

Question 16

The economy

Answer 16

The economic activity carried out by people and businesses in a country.

Question 17

Economic growth

Answer 17

Rises in the rate of economic activity in the economy. It is measured by calculating the value of sales in an economy over a period of time.

Question 18

Business Cycle

Answer 18

Fluctuations in the level of economic activity over a period of time. Most economies experience times when economic activity is rising and other when economic activity is slowing.

Question 19

Recession

Answer 19

A situation when the level of economic growth is negative for two successive quarters.

Question 20

Stakeholder

Answer 20

An individual or a group which has an interest in and is affected by the activities of a business; stakeholders have an interest in how the business operates and whether or not it is successful. eg. Customers, Local Residents, Pressure Groups, Shareholders, etc