H1.5 External Factors (PESTEC)

An increase in the _______ rate causes borrowing costs to increase, giving people less money to spend.

An increase in ______ means prices are generally rising, and so the cost of living is higher.

Which of these is NOT a consequence of high inflation?

• Supplies get more expensive

• Workers may expect higher wages

• Business will make more profit

• People have less disposable income

Answer explanation

Business will likely make less profit, as their supplies get more expensive and people have less money to spend.

A fall in ______ tax will mean people pay less to the government from their salary. This means they will have money to spend.

________ fiscal policy aims to create economic growth through reduced taxation and increased government spending.

A rise in the ______ rate makes a currency stronger, which makes foreign supplies cheaper. However, this makes your products more expensive for foreign consumers.

The number of people willing and able to work, but unable to find a job is know as the _____ rate.

Which of the following is NOT true when unemployment is high?

• There is an increase in crime

• the government will save money

• people have less money to spend

• the business can pay lower wages

Answer explanation

The government will likely have to spend more in benefits.

Business can reduce wages as there is a greater supply of workers; more unemployment means more people earning no money; and lots of research equates high unemployment with increased crime.

_____ factors are concerned with changing demographics of the population, changing tastes and beliefs.

______ policy prevents unfair mergers which would give a firm too much power, and prevents the use of destroyer/predatory pricing.