Business Unit- Economic and Environmental issues

GDP

GDP

the total value of output of goods and services in a country in one year

recession

falling period of GDP

Inflation

the increase in average price level of goods and services over time

Unemployment

people who are willing and able to work but cannot find a job

Economic growth

when a country’s GDP increases- more goods and services are produced than in the previous year

Balance of payments

the difference between a country’s exports and imports

Real incomes

the value of income, falls when prices rise faster than money income

Exports

goods and services sold from one country from other countries

Imports

goods and services bought in by one country from other countries

Exchange rate

the price of one currency in terms of another

Exchange rate depreciation

the fall in the value of a currency compared with other currencies

Fiscal Policy

any change by the government in tax rates or public sector spending

Direct taxes

paid directly from incomes. Examples: income or profits taxes

Indirect taxes

added to the prices of goods and taxpayers pay the tax as they purchase the goods. Example: VAT

Disposable income

the level of income a taxpayer has after paying income tax

import tariff

a tax on an imported product

import quota

physical limit on the quantity of a product that can be imported

Monetary policy

a change interest rates by the government or central bank.

Social responsibility

when a business decision benefits stakeholders other than shareholders. For example, a decision to protect the environment by reducing pollution by using the latest environmentally friendly production equipment

Environment

our natural world

Global warming

gradual increase in the overall temperature of the Earth’s atmosphere, generally thought to be caused by increased levels of CO2, CFCs and other pollutants in the atmosphere

Pressure Group

made up of people who want to change business or government decisions by taking action such as organizing consumer boycotts

Private costs

an activity that are the costs paid for a business or the consumer of the product

Private benefits

an activity that are gains to a business or the consumer of the product

External costs

costs paid for by the rest of society, other than the business, as a result of business activity

External benefits

the gains to the rest of the society, other than the business, as a result of business activity

Social cost

external costs+private costs

Social benefits

external benefits+private benefits

Sustainable development

development which does not put at risk the living standards of future generations

Consumer boycotts

when consumers decide not to buy products from businesses that do not act in a socially responsible way

Ethical decisions

based on a moral code