2.5 keywords Flashcards
economic growth
An increase in the number of goods or services produced in an economy (GDP). Measured by GDP figure or % change in GDP.
economic influences
The economic environment consists of key economic factors such as Interest Rates, Exchange Rates, Inflation that influence the behaviour of businesses and their customers.
economic uncertainty
The economic environment is difficult to accurately predict and prone to shocks or unpredictable events.
economic variables
Fluctuations in factors outside of the business’ control that affect the state of the economy and therefore business and consumer behaviours.
exchange rates
The value of a currency in terms of another e.g. £1 : $1.50
inflation
A general rise in prices or a fall in the value of money measured by CPI or RPI and caused by demand pull or cost push factors.
the rate of inflation
Shows how prices have changed based on the same period a year earlier. It is an indication of the cost of living changing.
consumer price index
A measurement of inflation based on a ‘basket’ of goods and services representative of what people buy in the UK, excluding housing costs.
appreciation
An increase in the value of a currency. This means the currency is worth more, e.g. £1 : $1.55 to £1 : $1.60.
depreciation
A decrease in the value of a currency. This means the currency is worth less, e.g. £1 : $1.35 to £1 : $1.30.
interest rates
The price of money i.e. the cost of borrowing or the reward for saving.
taxation
A financial charge by the government on an individual or firm to control the economy e.g. to stimulate or curtail demand.
direct tax
Applies to income earned or capital gained.
indirect tax
Applies to expenditure on products.
government spending
The amount of expenditure undertaken by the government on an annual basis to achieve economic and political objectives on things such as healthcare and education.
