1.5.4 The Economy and Business

Which of these businesses is most likely to sell more when consumer income falls?

• Travel agent

• Jeweller

• Pound shop

Which of these phrases best defines an unemployed person?

• Someone without a job who is in full-time education

• Someone without a job who is actively seeking work

• Someone without a job who is unable to work

What would happen if the US dollar appreciated against the pound?

• UK goods would become cheaper to buy in the US

• US goods would become cheaper to buy in the UK

• UK businesses would expect to sell less in the US

What would an increase in interest rates encourage?

• More consumer spending

• More borrowing

• More saving

What is expected to happen when unemployment falls?

• More people will be without a job

• Consumer spending will rise

• More inferior goods will be sold

What happens when there is inflation?

• Prices stay the same

• Purchasing power decreases

• Prices fall temporarily

What is an ‘exchange rate’?

• A general and sustained increase in prices

• The cost of borrowing money

• The price of one currency in terms of another currency

The exchange rate changes from £1 = €1.20 to £1 = € 1.30. What has happened?

• The pound has appreciated against the euro

• The pound has weakened against the euro

• The pound has depreciated against the euro

What does the acronym SPICED stand for when used to explain what happens if the pound appreciates?

• Selling Pounds Increases the Chances that Exports are Dearer

• Strong Pound makes Imports Cheaper but Exports Dearer

• Some Products are Imported Cheaply or Exported Daily

Which of the following is an example of a tax on sales?

• VAT

• Income tax

• Corporation tax