304 - PEST factors - Economic Flashcards
(13 cards)
what is GDP ?
Gross Domestic Product is a measurement of economic growth
- total value of output (all production of good and services ) in a year
Economic Growth
- Is the increase in the production of economic goods and services, income and spending level in the economy.
- Measured through GDP every 3 months (quarter)
Business Cycle
Shows the increase and decrease in economic growth (GDP) over time.
What is a Boom ?
A period of high economic growth
- high level of consumer spending
- prices and costs tend to rise faster
- low unemployment as more jobs
- demand for normal and luxury goods increase
What is a Recession ?
Recession is defined as two consecutive periods of negitive economic growth ( 2 quarter )
What is a Slump / Depression ?
A prolonged period of declining GDP
- very low consumer spending
- many business fail and have to rationalise to survive
- high unemplyment rates
- prices fall deflation
What is a Recovery ?
The economy start to grow slowly
- consumers begin to increase spending
- unemplyment rates decrease
- Business increase stock and investment and make profits
What causes Inflation ?
- If there is too much demand and limitied supply - business raise prices
- If business costs increase - business raise price to cover cost and make profits
Interest Rate
Interest rate Is the price of money. It is the return on savings and the cost of borrowing money
- high interest rates ( consumers are more likely to save ) ( cost of business increase )
- low interest rates ( consumers are more likey to spend ) ( loans become cheaper )
Exchange Rates
The exchange rate is the price of one currency against another
impact price of imports and exports
S.P.I.C.E.D
Strong Pound Imports Cheaper Exports Dearer
W.P.I.D.E.C
Weak Pound Imports Dearer Exports Cheaper
Unemployment
Unemplyment occurs when workers are unable to find jobs ( harder )
- Nature of the industry ( lack skills or is declining )
- Ression
- Waiting forr a job
