Theme 2.5 External Influences

Question 1

What are the 3 economic influences?

Answer 1

• inflation
• exchange rates
• interest rates

Question 2

What is inflation?

Answer 2

General rise in prices
Problems caused:
- high repayments on loans
- increased costs e.g raw materials
- consumer change spending habits

Question 3

Health & Safety Legislation

Answer 3

• prevent stress
• rest periods
• hygienic

Question 4

Competition policy laws

Answer 4

• prevent abuse of market power
• predatory pricing

Question 5

Environmental protection laws

Answer 5

Responsible for environmental impact
- pollution
- destruction of wildlife

Question 6

Employee protection laws

Answer 6

Prevent exploitation of workers
- receive at least a minimum wage
- working conditions
- equality
- belong to trade unions

Question 7

Consumer protection laws

Answer 7

Ensures consumers are treated fairly
- safety of a product
- rights if unhappy with product
For a business: increase expenditure decrease profit

Question 8

What is legislation?

Answer 8

Laws and regulations passed by government -> require business to conduct in a particular manner

Question 9

Interest rates

Answer 9

Reward for saving and cost borrowing
- Business want interest to be high when saving and low when borrowing

Question 10

Exchange rates

Answer 10

Value of one currency expressed in the terms of another
S trong
P ound } cost of production fall
I mport
C heaper
E xport } harder to sell to foreign
D earer markets