2.5.1 Economic influences Flashcards
What does Economy mean?
The system by which a country’s money and goods are produced and used.
What is Inflation?
A general rise in prices or a fall in the value of money
What are the 2 Measurements of Inflation?
Retail Price Index (RPI) – a measurement of a ‘basket’ of goods and services representative of what people buy in the UK
Consumer Price Index (CPI) – similar to RPI but mainly excluding housing costs
What is the main downside of Higer Inflation on a business?
Increased costs
Wha is an Exchange rate?
The price of one currency in terms of another e.g. £1 = $1.50
An increase in the value of a currency is called an _____?
Appreciation
What does SPICED mean?
Strong Pound: Imports Cheaper Exports Dearer
What does WPIDEC mean?
Weak Pound: Imports Dearar, Exports Cheaper
What are interest rates?
The price of money i.e. the cost of borrowing or the reward for saving/lending
What is Taxation?
Taxation is the process of imposing charges on business and individuals by the government
What is Govenment Expendeture?
The expenditure by the government on supplying goods and services to achieve economic and political objectives
What is the Business Cycle?
Fluctuations in the level of economic activity over time.
In a business cycle, what happends in a Boom?
High levels of consumer spending
In a business cycle, what happends in a Depression/ Slump?
A prolonged period of declining GDP
In a business cycle, what happends in a Ressesion?
Falling levels of consumer spending and confidence
