AQA BUSS4 - Assessing Changes in the Business Environment

Business and the Economic
Environment
Macroeconomics
The study of the whole economy

The study of macroeconomics is primarily concerned with
the total level of spending/demand and production/supply
employment and unemployment levels
rate of interest and inflation
exchange rate

In effect, it is concerned with making the most efficient use of…

The Business Cycle
The regular pattern of ups and downs in demand and output within an economy , or
of gross domestic product growth over time. It is characterised by four main phases;
boom, recession, slump and recovery.

Some firms are more vulnerable to changes in the business cycle and…

Economic Growth
An increases in the level of economic activity or real gross domestic product

Essentially, economic growth is then extent to which the volume of goods and services
being produced increases over time. If the GDP increases by 6% and the inflation is 2%, this
means the real GDP…

Interest Rates
The cost of borrowing money and the return of lending money. They also measures
the opportunity cost to both individuals and firms of spending money rather than
saving it and receiving interest

A firm that is considering an investment project will need to consider the interest rates, as…

The price of one country's currency in terms of another

There are exchange rates for pounds sterling against all other currencies, although the
most common ones are the rates against the euro, the US dollar and the Japanese yen.

Policies
There are two strategies the government can adopt in order…

Impact on Exporters
A rise in the value of the pound less competitive export price
Fall in the value of the pound more competitive export price
Profit Margins:
A rise in the value of the pound will lead to a small profit margin, as the pound will be worth
more.…

Inflation
An increase in the general level of prices within an economy. It also means there is a
fall in the purchasing power of money
It is important to determine the difference between real and nominal values of money. For
example, a 2% pay rise may be a welcome bonus…

Unemployment
Number of jobless people who want to work, are available to work and are actively
seeking employment

Types of Unemployment
Structural ­ Long term unemployment resulting from a change in demand, supply or
technology in the economy, which produces a fundamental decline in an industry
Cyclical ­ Unemployment resulting…

sacrificed. An important factor to consider is to ensure that strategies put in place to deal
with the problem, but doesn't have a negative effect in the long term.
Globalisation of Markets
the process enabling financial and investment markets to operate internationally
The pace, scope and scale of globalisation has…

of the business cycle in the UK and other countries, the degree of trade protection in the
form of import controls, and exchange rates.
Emerging Markets
An international area that has potential to grow and develop in terms of productive
capacity, market opportunities and competitive advantage


Development of Emerging Markets…