External Influences

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Market
Any situation where buyers and sellers are in contact in order to establish a price
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Barriers to entry
the factors that could prevent a business from entering and competing in the market
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Barriers to exit
the factors that could prevent a business from leaving a market, even if it would like to
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Equilibrium
the situation in market when demand is equal to supply
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Substitute
an alternative product that serves the same function
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Complement
a product that is used, and is therefore bought, in conjunction with each other
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Subsidy
a payment from the government to encourage a business to increase supply
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Elastic
where the change in demand results from a price change is greater then the change in price that caused it
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Inelastic
where the change in demand that results from a price change is less than the change in price that caused
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Free trade
trade without tariffs or quotes being imposed when products are traded
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Single market
a market in which there is a single set of laws and regulations relating to the movement of products, people and money; all business in the single market have to abide by these
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Euro
the single currency that came into being in most EU countries on 1st January 1999
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Eurozone
the collective name for countries that have adopted the euro as their single currency
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European Central Bank (ECB)
the central bank that sets interest rates for the whole of the eurozone
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Globalisation
the process of growth in world markets through a process of integration where it is possible to trade in a global market in the same way as one would in a domestic market
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Exchange rate
the value of the pound in terms of currency
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Foreign exchange market
the market for currency, which is not a single location but exists globally whenever buyers and sellers deal
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Hot money
flow of money from country to country, which is chasing the highest rate of interest it can possibly get
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Fiscal Policy
the use of government spending and taxation, through the government's annual budget, to influence the level of demand in the economy
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The competition and markets authority (CMA)
the government organisation that makes markets work well for consumers
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Monopoly
any business that controls more than 25% of the market share
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Macroeconomics
the study and analysis of the behaviour of the whole economy
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the economy
the collective behaviour of a number of different groups such as businesses, people as employees and consumers, and the government
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Economic activity
the level of output in all sectors of the economy - primary, secondary and tertiary
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Gross domestic product
the total value of all of the economy's output (measured quarterly or yearly)
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Circular flow of income
the continuous flow of income from businesses to households as payment for work, and from households to businesses as payment for products
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Imports
purchase of goods from abroad
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Leakages
Income that leaks away from the economy and so does not get passed back to the UK firms from households; this compromises taxes, savings and imports
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Injections
Income coming into the UK economy that does not come from UK households; this compromises investment, government spending and exports
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Exports
the sales of goods to other countries by UK companies
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Investment
the purchase of capital equipment and/or buildings by businesses
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Business cycle
rises and falls in economy activity; these follow a pattern that can be identified as boom, recession, slump and economy
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Inflation
persistent general tendency of prices in the economy to rise
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'In real terms'
earnings (wages, revenue or profit) adjusted for the effects of price rises. Price rises reduce the purchasing power of spendings
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Economic growth
an increase in the volume of goods and services (GDP) produced each year
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Balance of trade
difference between the value of exports and imports. If exports exceed imports, there is a balance of trade surplus; if imports exceed exports, there is a balance of trade deficit
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Bank of England
the central bank in the UK; as banker to the government and other banks, it conducts monetary policy and is not involved in personal banking
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Monetary policy
manipulation of the level of demand in the economy using the rate of interest
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Monetary Policy Committee (MPC)
the committee at the bank of England that meets once a month to decide whether to change the rate of interest
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The Budget
an annual statement of how much the government intends to spend in the next year and how this spending will be financed
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Regional policy
government financial assistance to try to encourage businesses into regions of the country where economic activity is low
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The multiplier
the effect of change in economic activity in one sector on other sectors; if one business experiences a rise or fall in demand for its products, this has a knock on effect on it's suppliers
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Civil law
law concerned with the rules that govern the relationships between businesses and/or people, for example employment and consumer rights
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Criminal law
this law defines the actions that the state has decided is wrong and the punishment that will result from these actions
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A contract
this is a legally binding agreement between two or more parties. Most business relationships are of a contractual nature and so contract law gives the basic framework of rights and obligations
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Employment tribunal
a special type of court that only deals with employment-related issues such as victimisation by an employer, unfair dismissal, and unfair discrimination
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Obsolescence
existing capital equipment is replaced by new developments in technology. For example, the replacement of a typewriter by the word processor
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Negative externality
a cost that arises out of production or consumption which is not paid for by the producer or consumer. Eg. pollution, congestion or litter
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Sustainability
the endurance of systems and processes. It refers particularity to preventing a negative impact from economic systems and production on the earth and its enviroment
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Globalisation
the growth of the world so that it can be viewed as a whole place rather than a number of separate countries. This result for business in increased interdependence and the ability to trade in the world as if it was one market
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Conciliation
the act of bringing parties together with an independent conciliator to find common ground and a solution to the problem. It differs from arbitration, in that there is no legal standing.
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Arbitration
a legal process outside the courts where both parties are bound by the decision of the arbitrator
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Other cards in this set

Card 2

Front

the factors that could prevent a business from entering and competing in the market

Back

Barriers to entry

Card 3

Front

the factors that could prevent a business from leaving a market, even if it would like to

Back

Preview of the back of card 3

Card 4

Front

the situation in market when demand is equal to supply

Back

Preview of the back of card 4

Card 5

Front

an alternative product that serves the same function

Back

Preview of the back of card 5
View more cards

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