6.1 External influences on business issues (Vocabulary)

Question 1

Definition of gross domestic product (GDP)

Answer 1

The total value of output of goods and services in a country in one year

Question 2

Definition of recession

Answer 2

A period of falling GDP

Question 3

Definition of inflation

Answer 3

The increase in the average price level of goods and services over time

Question 4

Definition of unemployment

Answer 4

This exists when people who are willing and able to work cannot find a job

Question 5

Definition of economic growth

Answer 5

When a country’s GDP increases - more goods and services are produced than in the previous year

Question 6

Definition of balance of payments

Answer 6

This records the difference between a country’s exports and imports

Question 7

Definition of real income

Answer 7

The value of income - it falls when prices rise faster than money income

Question 8

Definition of exports

Answer 8

Goods and services sold from one country to other countries

Question 9

Definition of imports

Answer 9

Goods and services bought in by one country from other countries

Question 10

Definition of exchange rate

Answer 10

The price of one currency in terms of another, for example 1$ = 23000 VND

Question 11

Definition of exchange rate depreciation

Answer 11

The fall in the value of a currency compared with other countries

Question 12

Definition of fiscal policy

Answer 12

Any change by the government in tax rates or public sector spending

Question 13

Definition of direct taxes

Answer 13

These are paid directly from incomes, for example income tax or profits tax

Question 14

Definition of indirect taxes

Answer 14

These are added to the prices of goods and taxpayers pay the tax as they purchase the goods, for e.g VAT

Question 15

Definition of disposable income

Answer 15

The level of income a taxpayer has after paying income tax

Question 16

Definition of import tariff

Answer 16

A tax on an imported product

Question 17

Definition of import quota

Answer 17

A physical limit on the quantity of a product that can be imported

Question 18

Definition of monetary policy

Answer 18

A change in interest rates by the government or central bank, for e.g the European Central Bank

Question 19

Definition of exchange rate appreciation

Answer 19

A rise in the value of a currency compared with other currencies

Question 20

Definition of supply side policies

Answer 20

Policies to increase the competitiveness of industries in an economy against those from other countries. Policies to make the economy more efficient

Question 21

Definition of business cycle

Answer 21

This is the regular patterns of upturns and downturns in demand and output within the economy that tend to repeat themselves every five years or so

Question 22

Definition of slump

Answer 22

This is a period of low demand and investment, and high unemployment

Question 23

Definition of recovery

Answer 23

This represents the part of the business cycle characterised by slowly rising levels of demands, investments, business confidence and falling levels of unemployment

Question 24

Definition of boom

Answer 24

This is a period when the economy is growing rapidly due to consumers, businesses and investors spending and borrowing too much

Question 25

Definition of interest rates

Answer 25

This represents the cost of borrowing money

Question 26

Definition of taxation

Answer 26

A compulsory financial charge or some other type of levy imposed by the government in order to fund government spending and various public expenditures

Question 27

Definition of government spending

Answer 27

The amount of expenditure which governments undertake with the revenue which they obtain from taxes and other sources

Question 28

Definition of quotas

Answer 28

A physical limit to the quantity of a product that can be imported