A2 - Business - The relationship between business and the economic environment

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  • Created on: 15-06-16 15:09
Marco-economic factors
Economic issues that affect the whole economy.
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Gross domestic product (GDP)
Measures the total value of output produced in a country over one year.
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Business cycle
Fluctuations in the level of economic activity, measured by real GDP, over time.
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Economic growth
An increase in a country's annual GDP, after adjusting for inflation. This is known as a 'real' increase in GDP.
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Inflation
A sustained increase in average prices of goods and services resulting in a fall in the value of money.
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Retail Prices Index (RPI)
The monthly record of inflation, starting from a base period = 100, calculated by recording price movements in hundreds of consumer goods and services.
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Consumer Price Index (CPI)
A measure of inflation based on the RPI but excluding housing costs. It is used by the government and the Bank of England as the UK inflation target. This target is 2% annual CPI inflation.
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Demand pull inflation
Price rises resulting from excess demand for products allowing firms to increase profit margins.
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Cost push inflation
Price increases resulting from higher costs of production that are passed on to consumers.
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Interest rates
The cost of borrowing capital.
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Structural unemployment
Jobs are lost as industries decline due to structural change in the economy, e.g. the decline of the UK shipbuilding and clothing manufacturing industries. This unemployment tends to be very regionally concentrated.
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Frictional unemployment
Occurs when people take some time to find another job after losing or leaving their previous one.
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Cyclical unemployment
General unemployment that occurs across many industries due to an economic downturn or recession. It is linked with periods of negative GDP growth in the business cycle.
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Exchange rate
The price of one currency in terms of another, e.g. £1 = $1.50.
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Exchange rate appreciation
An increase in the value of a country's currency in terms of other currencies. This lowers prices of imported goods but may force exporters to raise prices.
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Exchange rate depreciation
A fall in the value of a country's currency in terms of other currencies. This raises prices of imports but may allow an exporter to reduce prices.
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Globalisation
The growing trand towards worldwide markets in products, capital and labour, unrestricted by barriers.
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Free trade
International tarde that is allowed to take place without restrictions such as protectionist tariffs and quotas.
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Tariffs
A tax imposed on an imported product.
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Quotas
A physical limit placed on the quantity of imports of certain products.
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Emerging markets (economies)
Economies characterised by low to middle income GDP per head.
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Other cards in this set

Card 2

Front

Measures the total value of output produced in a country over one year.

Back

Gross domestic product (GDP)

Card 3

Front

Fluctuations in the level of economic activity, measured by real GDP, over time.

Back

Preview of the back of card 3

Card 4

Front

An increase in a country's annual GDP, after adjusting for inflation. This is known as a 'real' increase in GDP.

Back

Preview of the back of card 4

Card 5

Front

A sustained increase in average prices of goods and services resulting in a fall in the value of money.

Back

Preview of the back of card 5
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