2.5 External Influences

Question 1

Appreciation

Answer 1

The rise in the price of one currency against another currency

Question 2

Barriers to entry

Answer 2

Obstacles that may get difficult for new firms to enter the market

Question 3

Boom/peak

Answer 3

The Highpoint in the business cycle where GDP is growing quickly

Question 4

Business cycle

Answer 4

Measures economic activity overtime and shows stages of boom, downturn (where there is rising unemployment), recession and recovery

Question 5

Consumer prices index

Answer 5

A measure which shows changes in average prices overtime

Question 6

Deflation

Answer 6

A fall in the general price level

Question 7

Depreciation

Answer 7

A fall in the value of a currency

Question 8

Downturn

Answer 8

A period in the economic cycle where GDP grows but slowly

Question 9

Economic influences

Answer 9

Economic variables such as economic growth, inflation, interest rates and unemployment

Question 10

Exchange rate

Answer 10

The price of one currency in terms of another

Question 11

Government expenditure

Answer 11

The amount spent by the government in its provision of public services and welfare benefits

Question 12

Inflation

Answer 12

The general increase in the level of prices in an economy in a year

Question 13

Interest rate

Answer 13

The price of borrowing money/the return on saving money

Question 14

Recession

Answer 14

When GDP falls for two or more quarters (six months)

Question 15

Recovery

Answer 15

A period where economic growth begins to increase again after a recession

Question 16

Unemployment

Answer 16

The percentage of the working population who are without a job and actively seeking work

Question 17

2.5.2

Consumer legislation

Answer 17

Legislation that is designed to protect consumers from poor quality products and poor business practices

Question 18

Consumer protection legislation

Answer 18

Is legislation aimed against any business unfair selling practices. The consumer has basically legal rights if the product/service is given a misleading description, of an unsatisfactory quality, unfit for purpose.

Question 19

Discrimination

Answer 19

Favouring one person or group over another

Question 20

Employee protection legislation

Answer 20

Laws that are business must follow that give employees basic rights to prevent them from being exploited e.g. Minimum wages, redundancy payment, maternity leave etc.

Question 21

Environmental protection legislation

Answer 21

Legislation designed to reduce the impact of businesses and protect the environment

Question 22

Health and safety

Answer 22

Measures put in place by businesses to prevent accident or injury in the workplace

Question 23

Legislation

Answer 23

A collective name for laws and regulations used by governments to restrict certain activity

Question 24

National minimum wage

Answer 24

A wage rate set by the government. It is illegal to pay below this.

Question 25

2.5.3 Market structure

Answer 25

The characteristics of a market, such as the size of the barriers to entry to the market, the number of businesses in the market, which determines the behaviour of businesses within the market