6.2 The Economic Climate Flashcards

All 10 cards in this deck

Give one impact on a small business of a rise in unemployment.

Any one of: demand falls because customers have less money to spend; recruitment becomes easier as more people are looking for work.

Give one way a business could respond to a fall in consumer incomes.

Any one of: cut prices or offer cheaper, value products; reduce costs, for example by cutting the workforce.

What is disposable income?

The income a consumer has left after tax and other deductions, which they are free to spend or save.

Why may a business selling cheaper or discount products gain sales when consumer incomes fall?

Customers with less to spend switch from more expensive products to cheaper alternatives.

How does a rise in consumer incomes usually affect demand for luxury products?

Demand rises, because consumers have more disposable income to spend on luxuries.

What is unemployment?

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

What is meant by the 'economic climate'?

The state of the economy that a business operates in — how well the economy is doing.

Name two economic factors, linked to people's jobs and spending power, that show the state of the economic climate.

Levels of consumer income and levels of unemployment.

Give one reason why a worsening economic climate might have little impact on a particular business.

It may sell low-priced necessities that customers keep buying, or have very loyal customers.

Give one way a business might respond to rising consumer incomes.

Any one of: increase output, e.g. by hiring staff or buying more stock; open more outlets or a bigger factory; raise prices, as customers can afford to pay more.