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What is meant by the term inflation?
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What is meant by the term inflation?
Inflation is the general rise in prices in an economy over time.
What does the acronym CPI mean?
CPI stands for Consumer Price Index, a measure of the monthly changes in prices of a range of goods and services.
Define the term exchange rate.
The exchange rate is the value of one currency expressed in terms of another.
What is a currency appreciation?
A currency appreciation is an increase in the value of a currency against other currencies.
True or False?
During a slump, recruitment and staff retention may become more challenging and require businesses to pay higher wages.
False.
During a boom, recruitment and staff retention may become more challenging and require businesses to pay higher wages.
True or False?
A depreciation of a currency makes a country's exports more expensive for foreign buyers.
False.
A depreciation of a currency makes a country's exports cheaper for foreign buyers.
What is the business cycle?
The business cycle describes the upturns and downturns in the level of a country's economic activity (Gross Domestic Product or GDP) over time.
Define the term recession.
Recession is when an economy experiences two consecutive quarters (6 months) or more of negative economic growth.
True or False?
Consumers are deterred from making significant purchases during periods of low inflation.
False.
Consumers are deterred from making significant purchases during periods of high inflation.
What are direct taxes?
Direct taxes, such as income tax and corporation tax, are levied by the government on income.
True or False?
Where domestic inflation rates are higher than those in other countries, UK businesses are less likely to be competitive and lose sales overseas.
True.
Where domestic inflation rates are higher than those in other countries, UK businesses are less likely to be competitive due to rising costs and losing sales overseas. Inflation makes domestic prices more expensive.
What is meant by exchange rate volatility?
Exchange rate volatility refers to frequent, unpredictable changes in the exchange rate between different currencies.
True or False?
Increased income tax reduces the disposable income of customers and demand for most products is likely to fall.
True.
Increased income tax reduces the disposable income of customers and demand for most products is likely to fall.
How does the government fund public spending?
The government funds public spending through taxation or public sector borrowing.
True or False?
Businesses can prepare for economic uncertainty by building up cash reserves when times are good.
True.
Businesses can prepare for economic uncertainty by building up cash reserves when times are good.
What is the aim of consumer protection legislation?
Consumer protection legislation aims to ensure that consumers are treated fairly by the companies with which they interact.
What is the aim of employee protection legislation?
Employee protection legislation aims to prevent the exploitation of workers.
True or False?
Consumer protection legislation covers the rights of customers if they are unhappy with their purchase.
True.
Consumer protection legislation covers the rights of customers if they are unhappy with their purchase, as well as the safety of products, the standard and quality of products and the product information that must be given to customers.
What is the purpose of health and safety legislation?
Health and safety legislation requires businesses to operate in a way that protects the physical and mental wellbeing of their employees, contractors, and customers.
True or False?
Health and Safety legislation covers the right for a worker to belong to a trade union and take industrial action.
False.
Employee protection legislation covers the right to belong to a trade union and take industrial action, as well as pay and working conditions, equality of employment rights, contracts and termination of employment.
What is the purpose of environmental protection law?
Environmental protection law aims to hold businesses responsible for their environmental impact.
What is the national minimum wage?
The national minimum wage is the lowest hourly amount employers are legally permitted to pay their workers.
What is the aim of competition laws?
Competition laws aim to protect the interests of both consumers and businesses by restricting anti-competitive practices.
What is a cartel?
A cartel is where a group of businesses collude with each other, usually to agree on setting high prices, in order to improve their profits and dominate the market.
True or False?
Serious health and safety breaches can lead to fines, investigation by the Health and Safety Executive, and in some cases, prosecution.
True.
Serious health and safety breaches can lead to fines, investigation by the Health and Safety Executive, and in some cases, prosecution.
Define the term market size.
Market size is the number of customers and sellers in a particular market.
What is a niche market?
A niche market is usually small in size and has limited demand. It often requires specialised market knowledge to produce goods or services that meet customers' specific needs.
True or False?
Businesses entering large markets may face less competition from established businesses.
False.
Businesses entering large markets may face more competition from established businesses, higher costs of promotion, and challenges in deciding their pricing strategy.
What is a unique selling point (USP)?
A unique selling point (USP) is a factor that differentiates a business or product from its competitors, such as local produce, specialty items, or a personalised shopping experience.
What is a competitive advantage?
A competitive advantage is a strength that a business has over its competitors, such as outstanding customer service, a great product, or technical expertise.
True or False?
Businesses entering niche markets expect to sell a high volume of products.
False.
Businesses entering niche markets may struggle to sell a high volume of goods due to limited demand as the market size is small.