CCEA A22 business key terms with complete verified definitions

Macro economics The study of the performance and behaviour of an economy as a whole. mixed economy An economic system that allows both the government and the private sector to allocate resources, e.g. the UK has a mixed economy. Previous Play Next Rewind 10 seconds Move forward 10 seconds Unmute 0:00 / 0:15 Full screen Brainpower Read More Business Cycle A measure of the regular fluctuations in the level of economic activity. It is made up of the following elements: peak, recession, trough and recovery. Gross Domestic Product (GDP) The value of goods and services produced by an economy over a specific time period. Peak (Boom) The stage when an economy is at the peak of activity. Recession Income and output begin to fall and business confidence is reduced. Trough (Slump) The lowest point in the trade cycle - production is low, businesses close and unemployment is high. Recovery At this stage income will start to rise and business output will increase, firms will invest more, consumers will start to increase spending and businesses will start to recruit new workers. Business Confidence An economic indicator that measures the amount of optimism or pessimism that business managers feel about the prospects of their companies/organisations. Government Policy Objectives A series of actions through which the authorities attempt to create the best possible economic environment for business and individuals. The main targets are: steady economic growth, controlled inflation, low unemployment, stable exchange rates and a balanced balance of payments. Economic Growth An indication of the change in output or income within the economy. Sustainable Development Growth which continues year on year. Inflation A continuing tendency for prices to rise. Unemployment The number of people who are of working age but not in a job. Balance of Payment An accounting record of all monetary transactions between a country and the rest of the world Current Balance The difference between the value of money entering and leaving a country as a result of trade in goods services and transfers. Imports Goods and services purchased from abroad for use in a particular country. Exports Goods and services sold by a particular country to another country. Economic Instruments These are the tools that a government uses to achieve policy objectives including: taxation, government expenditure, interest rates and exchange rates. Fiscal Policy A policy designed to manage the level of aggregate demand in the economy by changing the level of government spending or taxation. Direct Taxes These are levied directly on individuals or businesses. A direct tax is one paid directly to the government by the persons on whom it is imposed. Examples include income taxes and corporate taxes. Indirect Taxes These are levied on spending on goods and services. E.g. VAT.