2.5

Question 1

Legislation

Answer 1

Set of las suggested by government, made official by parliament

• Consumer protection
• Employee protection
• Environmental protection
• Competition policy
• Health and safety

Question 2

Effects of inflation

Answer 2

• Increased cost of raw materials
• Cut back on investment
• Less exports

Question 3

Characteristics of an entrepreneur

Answer 3

• Vision
• Passion
• Motivation
• Risk-taking
• Curiosity
• Creativity
• Confidence

Question 4

Taxation

Answer 4

Percentage of income or spending paid by individuals and businesses to the government

Question 5

Effects of taxation

Answer 5

Consumers have less money left over to spend on goods and services

Question 6

Subsidy

Answer 6

Financial assistance provided by the government to support economic activities that it wishes to encourage

Question 7

Exchange rate

Answer 7

Price of one currency expressed in terms of another currency

Question 8

If currency increases…

Answer 8

• Imports from there become more expensive for other counties
• Exports become cheaper for the country

Question 9

If currency decreases…

Answer 9

• Imports from there become cheaper for other countries
• Exports become more expensive for the country

Question 10

Business cycle

Answer 10

Characterised by periods of expansion and recession

Question 11

Expansion

Answer 11

Increase in positive economic indicators such as employment, income, output, wages, profits, demand, and supply of goods and services

Question 12

Recession

Answer 12

Significant decline in real economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale and retail sales

Question 13

Appreciation

Answer 13

Increase in the external value of one currency in relation to another currency

Question 14

Deppreciation

Answer 14

Cost of a fall in value of fixed assets is recognised in the financial accounts of a business

Question 15

Economies of scale

Answer 15

Internal
- Bulk buying
- Larger businesses can invest technology
- Larger businesses have better interest rates
- Can employ specialists for specific areas
External:
- Growing number of firms may encourage a more skilled workforce
- There is more change of there being collaborations between businesses

Question 16

Base rate

Answer 16

The rate of interest around which a bank structures other interest rates.

Question 17

Customer price index

Answer 17

A common measure of price changes used in the UK

Question 18

Business cycle

Answer 18

A diagram showing the fluctuations seen in an economy (e.g. boom, recession, etc.)

Question 19

Market structures

Answer 19

The characteristics of a market, such as the size, barriers to entry, the number of businesses in the market, etc. All of which determine the behaviour of businesses within the market

Question 20

Monopoly

Answer 20

A market in which there are many buyers but only one seller.

Question 21

CMA

Answer 21

Competition and Markets Authority. An independent body who regulate competition in the UK. They sign off on acquisitions and will punish any price fixing.