Unit 6 - External in uences on business activity

Question 1

Gross Domestic Product (GDP)

Answer 1

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

Question 2

Recession

Answer 2

is when there is a period of falling GDP

Question 3

In flation

Answer 3

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

Question 4

Unemployment

Answer 4

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

Question 5

Economic growth

Answer 5

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

Question 6

Balance of payments records

Answer 6

the di erence between
a country’s exports and imports

Question 7

Real income

Answer 7

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

Question 8

Exports

Answer 8

are goods and services sold from one country
to other countries

Question 9

imports

Answer 9

are goods and services bought in by one
country from other countries

Question 10

Exchange rate

Answer 10

is the price of one currency in terms of another

Question 11

Exchange rate appreciation

Answer 11

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

Question 12

Exchange rate depreciation

Answer 12

is the fall in value of a currency compared with other currencies

Question 13

Fiscal policy

Answer 13

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

Question 14

Direct taxes

Answer 14

are paid directly from incomes, eg- income tax or pro ts tax

Question 15

indirect taxes

Answer 15

are added to the prices of goods and taxpayers pay the tax as they purchase the goods, eg- VAT

Question 16

Disposable income

Answer 16

is the level of income a taxpayer has after paying income tax

Question 17

Import tari ff

Answer 17

is a tax on an imported product

Question 18

Import quota

Answer 18

is a physical limit on the quantity of a
product that can be imported

Question 19

Monetary policy

Answer 19

is a change in rates by the
government or central bank

Question 20

Supply-side policies

Answer 20

aim to increase supply and make
the economy more e fficient

Question 21

Private costs

Answer 21

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

Question 22

Private benefit s of an activity

Answer 22

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

Question 23

External costs

Answer 23

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

Question 24

External bene fits

Answer 24

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

Question 25

Social cost (Calculation)

Answer 25

Social cost = external costs + private costs

Question 26

Social benet (Calculation)

Answer 26

Social benet = external benets + private benets

Question 27

Globalization

Answer 27

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

Question 28

Free trade agreements

Answer 28

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

Question 29

An import tariff

Answer 29

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

Question 30

An import quota

Answer 30

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

Question 31

Protectionism

Answer 31

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

Question 32

Multinational businesses

Answer 32

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