IGCSE Business unit 6- External influences on business activity

Government economic objectives

• Positive balance of payments

• Low inflation

• Low unemployment

• Economic growth

Balance of payments definition

the difference between the values of export and import of goods and services of a country over a year

Disadvantage of having a negative balance of payments

If there is more imports than exports then there is more foreign currency flowing out of the country than coming into the country (balance of payments deficit), this causes a shortage of foreign exchange, and means that the government will have to borrow foreign currency from other countries at high rates of interest, which may affect exchange rates, also impacts local businesses.

Inflation definition

The price increase of goods and services over time