Flashcards
Topic 5.2 Risk or Uncertainty?
Cards in this deck (29)
- 1How is business success measured?-Profits
-Market Share
-Competitive Advantage
-Social Success
-Environmental Issues
-Brand Awareness and reputation - 2Business FailureWhen the revenue they earn from sales cannot cover the costs of production and therefore can no longer trade
- 3What causes business failure?-Changes in demand
-Cash flow problems
-Marketing mix problems
-Productivity Issues
- State of the economy
-Increased competition
-Changing market conditions - 4Consumer Price Index (CPI)Measures the rate of inflation. Change in price/original price x100
- 5Level of demandThe amount of spending that takes place in the economy. This spending can be businesses, individuals and the government.
- 6Level of economic activityThe amount of buying and selling that goes on over a period of time
- 7Consumer confidenceA measure to the extent to which consumers are prepared to spend money
- 8InflationAn increase of the general price level, measured by CPI.
- 9Cost of livingA measure of the average cost of basic necessities, such as goods, housing and clothing.
- 10External ShockAn unanticipated change in demand or inflation caused by factors beyond the control of the country, i.e. a rise in oil prices
- 11Internal ShockAn unanticipated change in demand or inflation caused by factors within a country, i.e. Housing Market
- 12UnemploymentWhere people who are actively searching for employment are unable to find work
- 13Problems with prices rising quickly?-Creates uncertainty for businesses
-It becomes difficult for businesses to know
: How much to pay suppliers
:What competitors will change
:How customer demand may change
-leads to lack of confidence in the economy - 14Causes of inflation-Cost push inflation: rise in cost of production can be passed to consumers meaning higher prices
-Demand Pull: A rise in level of demand, especially when supply cannot keep up - 15Factors which affect the level of demand-Level of economic activity
-Consumer confidence: high=high demand
-Interest rates: High=lower demand as more people want to save not spend. - 16Costs of unemployment to individuals-Family break up- divorce rates increase
-Loss of self-esteem- individuals feel depressed and worthless
-Losing skills- lead to difficulty for future jobs
-Lower level of income and standard of living decreased - 17Costs of unemployment to society-Crime- when income falls people turn to crime
-Impact other businesses- people spend less, sales revenue decreases
-Less tax revenue, so government spend less on public things
-Benefits- have to increase tax or borrow more from other countries to cope - 18ExportGoods and services which are sold to other countries and which lead to payments to the UK
- 19ImportGoods and services which are bought from countries and which lead to money going out the UK
- 20Exchange rateThe value of one currency in terms of another
- 21(Exchange Rates) SPICED and WPIDECStronger Pound Imports Cheaper Exports Dearer
Weaker Pound Imports Dearer Exports Cheaper - 22Factors causing exchange rate to change-Tourists travelling abroad
-Businesses trading with other countries
Investors investing abroad
-Other countries - 23Monetary PolicyThe use of changes in interest rates (the cost of borrowing money or the returns received on savings) to control inflation, changed by the B.O.E.
- 24Economic ActivityThe total amount of buying and selling that takes place in an economy over a period of time
- 25Cash Flow solutionCash inflow(Receipts) - Cash Outflows (Payments) = Net Cash Flow
Net Cash Flow + Opening Balance = Closing Balance - 26Fiscal PolicyThe use of taxation and government spending to achieve government objectives
- 27Corporation TaxA tax on a limited liability company's profits. A rise in this tax means companies keep less of their profits.
- 28National Insurance ContributionsThese contributions are payments made by both the employee and employer. They pay for the cost of a state pension and the NHS. An increase in this raises a company's costs.
- 29What can the government do about social problems?-Levy tax
-Impose regulations
-Adverts as warnings
-Offer incentives
-Offer support
-Legislation
-Education
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- GCSE Economics Flashcards on Topic 5.2 Risk or Uncertainty?, created by Edmund Lau on 06/12/2015.
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- Edmund Lau
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