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Key Terms - Unit 4 - Relationship between business and economic environment
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- 1PESTLE AnalysisA framework for assessing the likely impact of the political, economic, social, technological, legal and environmental factors in the external environment of a business.
- 2MacroeconomicsThe study of the whole economy
- 3MicroeconomicsThe study of the individual parts of the economy
- 4Gross Domestic Product (GDP)The total value of a country's output over the course of a year
- 5Gross National Products (GNP)The total value of a country's output over he course of a year plus net income from abroad.
The growth in real GNP per head is the main measure of economic growth. - 6Consumer DurablesGoods that are owned by households, but which are not instantly consumed by them. (e.g. cars, computers, televisions, refrigerators and washing machines).
- 7StockRaw materials, components, work-in-progress, finished goods.
- 8Capital (or invested) GoodsItems that are purchased by firms because they help them to produce goods.
- 9Business (or trade) CycleThe regular patterns of ups and downs in demand and output within an economy, or of gross domestic product (GPD) growth over time.
It is characterised by four main phases: Boom, Recession (downturn) Slump and Recession (upturn). - 10BoomPeriod characterised by high levels of consumer demand, business confidence, profits and investment at the same time as rising costs, increasing prices and full capacity.
- 11RecessionPeriod characterised by falling levels of consumer demand, output, profit and business confidence, little investment, spare capital and rising levels of unemployment.
- 12SlumpPeriod characterised by very low levels of consumer demand, investment and business confidence, an increasing number of businesses failing and high unemployment
- 13RecoveryPeriod characterised by slowly rising levels of consumer demand, rising investments, patchy but increasing business confidence and falling levels of unemployment
- 14Interest RatesThe cost of borrowing money and the return for lending the money. They also measure opportunity costs, to both individuals and firms, of spending money rather than saving it and receiving interest
- 15Exchange RatesThe price of one country's currency in terms of another
- 16Flexibility/Freely/Fluctuating Exchange RatesThe demand for, and the supply of, the currency determine the exchange rate
- 17Field Exchange RatesThe Government decides to fix the value of its currency permanently in relation to other countries
- 18InflationAn increase in the general level of prices within an economy. Inflation also means that there is a fall in the purchasing power of money
- 19DeflationA decrease in the general level of prices within an economy or a rise in the purchasing power of money.
- 20Cost Push InflationThis occurs when there is an increase in the costs of production (including wages, raw materials, fuel, taxation and interest rates) that forces firms to increase their prices in order to protect their profit margins
- 21Demand Pull InflationThe process by which prices rise because there is excess demand in the economy
- 22Inflation expectationsViews about what will happen to the rates of inflation in the future
- 23HyperinflationA situation where the value of money decrease so fast that people lose confidence in it
- 24UnemploymentThe number of jobless people who want to work, are available to work, and are actively seeking employment.
- 25Structural UnemploymentLong term unemployment resulting from a change in demand, supply or technology in the economy, which produces a fundamental decline in an industry.
- 26Cyclical UnemploymentUnemployment resulting from an economic down turn or recession in the business cycle
- 27GlobalisationThe process enabling financial and investment markets to operate internationally largely as a result of deregulation and improved communications
- 28International CompetitivenessThe ability of firms to sell their products successfully both abroad in export markets and at home in competition against imports
- 29Emerging MarketsAn international area that has the potential to grow and develop in terms of productive capacity, market opportunities and competitive advantage
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- A Levels A2 Business Fichas sobre Key Terms - Unit 4 - Relationship between business and economic environment, creado por danny-hudson97 el 30/12/2014.
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