12 marks
Businesses are affected by changes in the external business environment.
Identify two factors in the business environment that can influence a business.
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The Economic Climate (AQA GCSE Business)
Topic Questions
49 mins17 questions
21 mark
An increase in interest rates would be which type of change?
Economic
Environmental
Legal
Technical
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31 mark
In which of the following situations is consumer spending most likely to increase?
Unemployment levels are falling
Interest rates are stable
Unemployment levels are rising
Interest rates are rising
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41 mark
Which of the following is likely to happen if the economic climate improves?
Unemployment rises
Consumer spending falls
Employment falls
Consumer spending rises
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51 mark
Which of the following may be an advantage of higher unemployment rates for businesses?
Consumer spending is likely to rise
Interest rates will rise
There will be more individuals applying for job vacancies
There will be less skilled labour available for employment
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62 marks
Identify two ways low consumer spending levels can have an impact on a business.
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72 marks
Identify two benefits of low interest rates to a business.
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12 marks
Explain one way a rise in unemployment might affect a business.
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22 marks
Explain one economic change that can affect a business.
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32 marks
Explain one economic influence on consumer spending.
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44 marks
State and explain two effects of a fall in interest rates.
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54 marks
DuJour is an independent jewellers that designs necklaces and bracelets to customers' own designs. It uses fine grade gold and silver and each item it produces is individual and unique. DuJour charges high prices for each item to cover the costs of design as well as manufacture by hand.
Explain two effects of a rise in employment rates for DuJour.
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6
2 marks
2 marksThe average annual wage in the UK at the beginning of 2024 is £28,000 per year.
It is estimated that wages will rise by 2.5% during 2024.
Calculate the new expected wage in 2025 for a person earning the average wage in January 2024.
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72 marks
2 marksThe number of people unemployed in Leeds during 2023 was 16,800 which is 4% of the labour force.
Calculate the total number of people in jobs and looking for work in Leeds in 2023.
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16 marks
Case Study
Swim to Success (STS) is a programme that teaches young children how to swim through weekly lessons, developed by Jade Jackson, an ex-Olympic swimmer. Jade employs swimming instructors who deliver the programme using the pool facilities at gyms across the north-east of England.
Number of pools with swimming classes | 5 |
Price per class per child | £9 |
Number of swimming classes per pool per week | 14 |
Maximum number of children per swimming class | 8 |
Jade set STS up as a sole trader because she wanted to make the key business decisions herself. Initially, Jade used a bank loan as her main source of finance and secured the loan against her home, which she owns.
Jade would like to expand STS. However, she is struggling to raise finance herself as her costs are still high. To help her manage financially, Jade has arranged an overdraft on her business bank account. She relies on this to pay employees if the business does not have enough cash at the end of the month. Jade has recently received a letter from the bank explaining that interest rates on bank loans and overdrafts are going to increase.
Analyse one effect of the increase in interest rates on STS.
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29 marks
Case Study
Cakehead has been making and selling upmarket brownies and bakes since 2004. It specialises in making cake postal boxes that are easy to order and delivered on time. Customers can choose their cakes and brownies from a selection on the website and pay online. The cakes and brownies are then automatically selected and packaged by advanced robotics according to the customer's individual orders. The boxes are then automatically labelled and dispatched to customers.
Cakehead sells its postal boxes to both corporate customers and private individuals. In recent months the firm has noticed the level of private individual sales has fallen as customer income levels have fallen. This is because interest rates have been rising.
Cakehead's objective is to expand the business over the next 5 years by using a bank loan to buy new machinery, and it is considering two options. It could expand its corporate customer base and retain the high profit margin on each order. Alternatively, Cakehead could reduce the price of each cake box to increase the number of individual orders it receives.
Recommend whether Cakehead should expand its corporate customer base or reduce its prices and increase the number of individual orders.
Give reasons for your recommendation.
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36 marks
Case Study
Krispy Kreme opened its first UK store in 2003 in London. The business sells doughnuts containing responsibly sourced ingredients in their stores, coffee shops, kiosks and cabinets in Tesco. Doughnuts can also be ordered online.
The business supports the communities in which it operates. A policy of recruiting the long-term unemployed has worked really well.
Krispy Kreme sell their coffee at £1.90 per cup. Research shows that some coffee shop customers are willing to pay more for ethically produced coffee and that most of these customers expect to pay around 10% more for this type of coffee.
In the past year, the rate of unemployment has fallen significantly.
Analyse one impact of falling unemployment for Krispy Kreme.
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