impact of economic factors on business function

Question 2

4 factors impacting business function

Answer 2

1. inflation
2. interest rates
3. availability of skilled and unskilled labour
4. unemployment rates

Question 3

inflation

Answer 3

a general and persistent increase in prices

Question 4

impact inflation has on business function

Answer 4

• consumers can buy fewer goods and services
• banks tend not to lend money because reserve bank of australia (RBA) will increase interest rate to control higher inflation
• business will have to pay more for supplies and increase their prices
• employees and unions may pressure businesses to increase wages in line with inflation further increasing business expenses

Question 5

interest rates

Answer 5

what a borrower pays a lender when they borrow their money on top of the principal amount burrowed

Question 6

impact of interest rates on business function

Answer 6

businesses debt repayments increase leaving businesses with less to spend on business function and expansion

businesses may delay plans to expand or introduce new products due to uncertainty of whether consumers will have the money to pay for these

higher interest rates thus decrease business activity

consumer debt repayments increase

Question 7

unemployment

Answer 7

people of working age who are without work

Question 8

impact of unemployment on business function

Answer 8

lower consuming spending as households have lower income

consumer spending focused on essential items

oversupply of available labour may result in lower pay levels

cost structure of a business model may benefit in that it may be necessary to increase wages

staff may be lower, employed worked may feel threatened to lose their jobs

Question 9

skilled labour

Answer 9

refers to workers who require certain training or skills to perform duties effectively

Question 10

unskilled labour

Answer 10

segment of the workforce associated with low skill levels and less paid. doesn’t require much training or formal education

Question 11

low availability of skilled and unskilled labour impact on business

Answer 11

harder for businesses to employ more staff so wages increase

increased economic activity can cause a shortage of skilled workers, so unskilled workers may be used to fill job vacancies

during shortage, workers may receive higher wage and can spend more on luxury items

Question 12

high availability of skilled and unskilled labour impact on business

Answer 12

easier for businesses to employ more staff meaning wages decrease

both skilled and unskilled workers will apply for many jobs and sometimes a skilled worker will find work in a low skilled job to obtain work

if many migrants come to Australia looking for unskilled jobs they desperate for work and get paid less