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Flashcards in 2.5 external influences Deck (33)
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1

what s an external influence?

- factors which are beyond the control of the business

2

what is GDP (gross domestic product)?

- measures of the value of output (activity) in the economy

3

what is demand?

- how much of a good or service a consumer wants and is able to pay for

4

what are the 6 external influences?

- political
- economic
- social
- technological
- legal
- ethical/environmental

5

how is the anagram for the 6 external influences?

- PESTLE

6

what is real incomes?

- measures the amount of disposable income available to consumers

7

what factors affect real incomes?

- price inflation
- wage growth
- employment levels

8

what factors affect consumer spending?

- real disposable incomes
- employment and job security
- household wealth
- expectations and sentiments
- marker interest rates

9

what is an interest rate?

- the reward for saving and the cost of borrowing expressed as a percentage of the money saved or borrowed

10

what is inflation?

- a sustained increase in the cost of living or the general price level leading to a fall in the purchasing power of money

11

what is the Y and X axis on the business cycle?

- Y= GDP
- X= time

12

what is the business cycle?

- peak/boom
- recession
- recovery/expansion

13

what is the economy like during a peak/boom?

- high investments
- high confidence
- high levels of spending
- higher incomes
- low unemployment
- higher inflation

14

what is the economy like in a recession?

- lower levels of spending
- falling confidence
- falling income
- rising unemployment
- inflation falls

15

what is the economy like in a recovery/expansion?

- increased confidence
- increased level of spending
- increasing income
- declining unemployment

16

what is deflation?

- a sustained fall in the general price level

17

what are 2 causes of inflation?

- demand pull (excess demand)
- cost push (costs rise)

18

what are consequences of inflation?

- money loses its value
- value of saving is reduced
- lack of competitiveness

19

what is an exchange rate?

- the price of one currency expressed in terms of another

20

what is SPICED?

S- stronger
P- pound
I- income
C- cheaper
E- exports
D- dearer

21

what is a monetary policy?

- using changes in the interest rate and money supply to manage the economy

22

what happens when interest rates fall?

- cost of borrowing is reduced
- greater consumer confidence
- effective disposable income rises
- boost in business investments

23

what is fiscal policy?

- involves the use of government spending, taxation and borrowing to affect the level of growth of aggregate demand, output and jobs

24

why does the government tax?

- raise revenue
- manage aggregate demand
- change distribution of wealth

25

what's direct tax?

- tax on income

26

what's indirect tax?

- tax on consumptions

27

what are 3 main areas if government spending?

- transfer payments
- current spending
- capital employed

28

what is a legislations?

- rules and regulations with which a business has to comply

29

what are the main roles of legislations?

- protect consumers
- fair treatment of employees
- ensure a level playing field

30

what is a dominant position?

- market share of over 50%