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Business Notes Emma Rudd BMA

External Influences

Inflation and Unemployment
What is Inflation?
Inflation is a persistent rise in the general price level and an associated fall in the
value of money. For many businesses a low rate of inflation is not a problem. So long
as wages are rising…

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Business Notes Emma Rudd BMA

Expectations and Inflation
Expectations are an important part of the process of creating inflation. If managers
and businesses anticipate rising inflation, they might take actions, which can fuel the
inflationary process. If firms expect their suppliers to increase the prices of raw
materials and components,…

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Business Notes Emma Rudd BMA

Reduced Expectations
The government has reduced the expectation of inflation. This has help businesses
to be confident in setting prices and has dissuaded unions from putting in excessive
(and inflationary) pay claims. The low rate of inflation in the UK has also been one of…

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Business Notes Emma Rudd BMA

Frictional Unemployment
People moving between jobs cause frictional unemployment. If a person leave one
job they may be unable to move into a new position immediately. Whilst they are
searching for new employment, they are classified as frictionally unemployed. The
government is providing improved information…


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