6. External Influence On Business Activity

Question 1

Gross Domestic Product (GDP)

Answer 1

the total value of output of goods and services in acountry in one year

Question 2

Recession

Answer 2

when there is a period of falling GDP

Question 3

Inflation

Answer 3

the increase in the average price level of goods and services over time

Question 4

Unemployment

Answer 4

when the people who are willing and able to work cannot find a job

Question 5

Economic growth

Answer 5

when a country’s GDP increases- more goods and services are produced than in the previous year

Question 6

Balance of payment

Answer 6

records the difference between a country’s exports and imports

Question 7

Real income

Answer 7

the value of income and it falls when prices rise faster than money income

Question 8

Export

Answer 8

goods and services sold from one country to other countries

Question 9

Import

Answer 9

goods and services bought in by one country from other countries

Question 10

Exchange rate

Answer 10

the price of one currency in terms of another

Question 11

Exchange rate appreciation

Answer 11

the rise in the value of a currency compared with other currencies

Question 12

Exchange rate depreciation

Answer 12

the fall in value of a currency compared with other currencies

Question 13

Fiscal policy

Answer 13

any change by the government in tax rates or public sector spending

Question 14

Direct tax

Answer 14

paid directly from incomes, eg- income tax or profits tax

Question 15

Indirect tax

Answer 15

added to the prices of goods and taxpayers pay the tax as they purchase the goods, e.g. VAT

Question 16

Disposable income

Answer 16

the level of income a taxpayer has after paying income tax

Question 17

Monetary policy

Answer 17

a change in rates by the government or central bank

Question 18

Supply-side policy

Answer 18

aim to increase supply and make the economy more efficient

Question 19

Private cost

Answer 19

an activity are the costs paid for by a business or the consumer of the product

Question 20

Private benefit

Answer 20

an activity are the gains to a business or the consumer of the product

Question 21

External cost

Answer 21

costs paid for by the rest of society, other than the business, as a result of business activity

Question 22

External benefit

Answer 22

the gains to the rest of society, other than the business, as a result of business activity

Question 23

Social cost

Answer 23

external costs + private costs

Question 24

Social benefit

Answer 24

external benefits + private benefits

Question 25

Globalization

Answer 25

the term used to describe increases in worldwide trade and movement of people and capital between countries

Question 26

Free trade agreement

Answer 26

exist when countries agree to trade imports/exports with no barriers such as tariffs or quotas

Question 27

Import tariff

Answer 27

a tax placed on imported goods when they arrive into the country

Question 28

Import quota

Answer 28

a restriction on the quantity of a product that can be imported

Question 29

Protectionism

Answer 29

when a government protects domestic businesses from foreign competition using tariffs and quotas

Question 30

Multinational business

Answer 30

those with factories, production or service operations in more than one country