Economic Change

What is Gross Domestic Product (GDP)?

The value of goods and services produced by a country during a certain period.

How does a change in GDP affect business decisions?

GDP growth is likely to coincide with an increase in demand, prompting businesses to respond accordingly.

What is taxation in the context of business?

Refers to the tax paid by businesses on any profits made.

How does increased taxation affect business decisions?

Increased taxation reduces profit after tax, impacting strategic investment decisions.

What are exchange rates?

Value of one currency expressed in terms of another currency.

How can changes in exchange rates affect businesses?

They can impact decision-making for businesses that import or export goods.

What is inflation?

The general increase in price levels and the reduction in the real value of money.

How does inflation affect business pricing?

Rising costs due to inflation may cause a business to increase its prices to maintain profit levels.

What is fiscal policy?

The use of government expenditure and taxation to influence economic demand.

What is monetary policy?

The control of money supply and interest rates to manage economic activity.

What is globalisation?

The trend for individual markets to become unified and worldwide.

What is one advantage of globalisation for businesses?

Offers opportunities for businesses to expand and target international markets.

What is a disadvantage of globalisation for local businesses?

It increases competition which can reduce market share and sales revenue for local businesses.

What benefit do emerging economies offer to businesses?

Provides new markets to target, increasing sales volume and access to cost-effective labor.

What is glocalisation?

When TNCs adapt their products to meet the needs of local consumers.

How does economic liberalisation affect TNCs?

TNCs take advantage of economic liberalisation by removing trade barriers to increase profit and market share.

What are the leading exporters of cars globally?

Germany is the leading exporter of cars.

What percentage of banana exports come from Latin America?

80% of banana exports come from Latin America.

Which companies dominate banana production?

Large American TNCs such as Chiquita and Del Monte dominate banana production.

Who are the largest importers of bananas?

EU countries and the USA.