Chapter 20: Business the economy and community development

Question 1

define economy

Answer 1

refers to all the producers, distributors and consumers of goods and services in the country

Question 2

economic growth

Answer 2

any increase in the financial value of all the goods and services produced from a countrys resources

Question 3

economic boom

Answer 3

occurs when the level of economic activity is increasing very quickly

Question 4

economic recession

Answer 4

when there is 2 consecutive quarters of falling GDP

Question 5

depression

Answer 5

prolonged period of falling GDP

Question 6

impact of unemployment on businesses

Answer 6

sales low and overall demand decreases
wage demands fall and workers are cheap
erodes confidence, undermining enterprise in economy

Question 7

impact of inflation on businesses

Answer 7

consumers are price sensitive and shop around
cost of living wage increases may be sought
high inflation increases uncertainty

Question 8

impact of interest rates on businesses

Answer 8

sales decrease as loans are more expensive
borrowing is more expensive so costs are high
high interest rates discourage investors

Question 9

impact of exchange rates on businesses

Answer 9

if the euro increases sales will decrease as they are more expensive
if the euro increases the price of imported goods goes down
stable exchange rates allows for business planning

Question 10

community development

Answer 10

refers to local people coming together to identify economic and social problems in their area and then developing and implementing a plan to solve these issues themselves