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WorksheetsThe Impact of Economic Factors On Business Function
Total questions: 41
Worksheet time: 34mins
When the economy is growing unemployment is low, people have more (a) income and loans, and credit cards are easier to obtain.
Spare money that can be spent on non-essential items such as electronics, cars, fashion, travel, and entertainment:
(a)
Money that must be spent on essential items such as food, rent, electricity, mortgage payments, transport and basic clothing needs:
(a)
When the economy is growing...
Consumers are willing to spend more and save less.
Consumers are less willing to spend and will save more.
Consumers are less confident that they will keep their jobs and be able to maintain an income.
Consumers are more confident they will keep their jobs and continue to earn an income.
When the economy is shrinking...
Consumers are willing to spend more and save less.
Consumers are less willing to spend and will save more.
Consumers are less confident that they will keep their jobs and be able to maintain an income.
Consumers are confident that they will keep their jobs and continue to earn an income.
When the economy is growing, banks are more willing to provide credit through loans and credit cards.
True
False
Every quarter the Australian Bureau of Statistics calculates the ____ ____ ____ (CPI) based on a list of the typical goods and services purchased by a household.
(a)
When the economy is doing well...
Prices of goods and services decrease.
The demand for goods and services is greater than the supply.
Employees wages raise and people are more able and willing to pay higher prices.
Prices rise because it costs businesses more to find stock.
A steady upward movement in price level, decreasing purchasing power over a period of time:
(a)
Inflation means that one has to pay (a) money for the same goods and services.
If inflation is high...
Businesses and consumers may change their market behaviour to use online shopping more to compare prices.
Luxury and 'designer' brands are replaced with basic or cheaper brands.
Businesses and consumers may import less expensive goods.
Consumers will spend more time searching for the lowest prices.
How is inflation measured?
Inflation is also measured by interest rates.
The CPI is the official measure of inflation in Australia.
The CPI can be thought of as an 'imaginary' basket of selected goods and services bought by a typical capital city household.
The CPI is merely a measure of the changes in the price of this basket of goods and services.
The basic principles of inflation are:
Consumers with a higher income will not change their spending.
Consumers will start to shop around for the lowest prices.
Consumers switch from luxury brands to basic brands.
Spending on leisure decreases.
People need to use higher levels of debt as big purchases are more expensive.
The cost of borrowing:
(a)
The ____ ____ ____ ____ (RBA) sets the interest rates.
(a)
The ____ ____ set by the RBA determine the ____ ____ businesses and individuals pay on their loans, mortgages and credit cards.
(a)
If interest rates increase...
More money going off to pay debts means individuals have less money to spend on day-to-day expenses and luxury items.
The cost of borrowing decreases.
The debt repayments increase.
Consumers without debts have an increased discretionary income.
(a) interest rates are an indicator of a strong economy.
Governments will increase interest rates to slow down an economy to maintain inflation rates. This means:
More expensive to borrow.
Consumers will hold off on purchases.
Business spending decreases.
Increased spending on paying debts.
Fewer sales for businesses.
(a) interest rates are an indicator of a weak economy.
Governments will decrease interest rates to stimulate the economy and drive consumer spending and economic growth. This means:
Less expensive to borrow.
More sales for businesses.
Easier to pay off debts.
Consumer spending decreases.
Consumers are more willing to spend on credit.
Supply and demand of (a) has an impact on wages.
If there is a shortage of people with specialised skills, the demand for labour is ____ and the supply is ____.
high, high
high, low
low, high
low, low
Businesses have to use high wages to attract and keep people in jobs that need specialised skills.
True
False
Unskilled jobs need people with special qualifications or skills.
True
False
The proportion of people who are actively seeking work and are unable to find a job:
(a)
(a) has an impact on business profit and success when it is increasing and decreasing.
Rising unemployment means... Pt. 1 of 2
Lower consumer spending
Spending on essentials rather than luxuries
Loss of skills when people are out of work for extended periods
Consumers have more discretionary income
Rising unemployment means... Pt. 2 of 2
Higher consumer spending
Less demand for goods and services
Lower wages - oversupply of workers
Low morale in work place - can effect productivity
Falling unemployment means... Pt. 1 of 2
Higher consumer spending
Spending broadened into luxuries
Less demand for goods and services
Higher wages increases business operating costs -> increased prices
Falling unemployment means... Pt. 2 of 2
Good morale in the work place
Loss of skills when people are out of work for extended periods
More demand for goods and services
Higher wage - short supply of skilled workers
Primary activities happening inside or within the premises of an organisation and lay down its main foundation or base:
(a)
The key internal functions of a business organisation:
Acquisition of finance
Purchasing of raw materials
Hiring of labour
Overhead expenses
Production of goods
Factors outside of a business' that affect the daily operations:
(a)
Examples of external factors Pt. 1 of 2:
Business cycle - booms and recessions
Human resources
Supply of labour
Management style
Examples of external factors Pt. 2 of 2:
Production of goods
Unemployment rates
Interest rates
Exchange rates
The price of a country's currency in terms of another currency. In other words, it represents how many units of a foreign currency a consumer can buy with one unit of their home currency:
(a)
If Australia has a strong currency: Pt. 1 of 2
This means higher value AUD.
Cheaper holidays - buy more for your money.
Buy imported goods cheaper - lower business costs.
May lead to increased domestic purchases.
If Australia has a strong currency: Pt. 2 of 2
Businesses miss out on sales.
It is more expensive for international travel for foreigners in Australia.
However high currency means that Australian export goods are more expensive to buy.
Consumers may buy more items online from other cheaper countries.
If Australia has a weak currency: Pt. 1 of 2
This means higher value AUD.
This means lower values AUD.
More money is needed to buy the same goods.
Imported goods are more expensive - higher business costs.
If Australia has a weak currency: Pt. 2 of 2
May lead to an increase in domestic purchases.
However low AUD value means that Australian export goods are cheaper to buy therefore it makes us more competitive in a global market.
It is less expensive for international travel for foreigners into Australia - tourism generates lots of income for businesses.
Businesses miss out on sales.
