External Influences in Business Environment: Economic Factors
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Questions and Answers

What is inflation?

  • The decrease in prices of goods and services
  • The elimination of prices of goods and services
  • The rise in prices of goods and services (correct)
  • The stability of prices of goods and services

    • How does high inflation impact businesses?

  • Reduces the prices of goods and services
  • Decreases the cost of borrowing
  • Leads to decreased customer spending (correct)
  • Promotes significant investments

    • What factors influence fluctuations in exchange rates?

  • Economic indicators (correct)
  • Government policies
  • Local weather conditions
  • Consumer behavior

    • Which of the following is NOT a key factor that influences an economy?

    <p>Natural disasters</p> Signup and view all the answers

    How does low inflation impact borrowing costs for businesses?

    <p>Reduces borrowing costs</p> Signup and view all the answers

    Why is it important for central banks to manage inflation?

    <p>To maintain purchasing power</p> Signup and view all the answers

    What do exchange rates represent?

    <p>The value of one currency compared to another</p> Signup and view all the answers

    How does high inflation affect customer spending?

    <p>Decreases customer spending</p> Signup and view all the answers

    What is the impact of an appreciating Australian dollar on imports and exports?

    <p>Imports become more expensive, exports become cheaper</p> Signup and view all the answers

    How do increasing interest rates affect consumer spending and business expenses?

    <p>Decreases consumer spending, decreases business expenses</p> Signup and view all the answers

    What is the main impact of increased government expenditure on taxes?

    <p>It may result in higher taxes</p> Signup and view all the answers

    How does decreased government expenditure affect income and employment growth?

    <p>Leads to slower growth in income and employment</p> Signup and view all the answers

    What are the stages of the economic cycle?

    <p>Expansion, Peak, Contraction, Trough</p> Signup and view all the answers

    How do decreasing interest rates influence borrowing and investing decisions?

    <p>Increases borrowing and decreases investing</p> Signup and view all the answers

    What factors can affect interest rates according to the text?

    <p>Inflation, central bank policies, market demand</p> Signup and view all the answers

    Why is government expenditure considered vital for economic growth according to the text?

    <p>It stimulates consumer spending and boosts employment</p> Signup and view all the answers

    What marks the end of the expansion phase and the start of a slowdown in the economic cycle?

    <p>Peak</p> Signup and view all the answers

    Which term refers to economic growth involving increased investment and employment?

    <p>Expansion</p> Signup and view all the answers

    What is the lowest point, indicating the end of an economic contraction and the beginning of recovery?

    <p>Trough</p> Signup and view all the answers

    What term refers to the removal of government financial regulation with the aim of increasing efficiency?

    <p>Deregulation</p> Signup and view all the answers

    In what way does globalisation connect countries, economies, cultures, and individuals worldwide?

    <p>Through technological advancements</p> Signup and view all the answers

    Which factor will influence where a business sources its supplies and defines its target markets?

    <p>Geographic location</p> Signup and view all the answers

    What signifies an economic decline characterized by falling GDP and rising unemployment?

    <p>Contraction</p> Signup and view all the answers

    What does globalization enable through technology and trade agreements?

    <p>Cultural exchange</p> Signup and view all the answers

    How does Australia's location in the Asia-Pacific region impact its business environment?

    <p>It results in a growing reliance on products from Asian countries like China</p> Signup and view all the answers

    What demographic shifts impact business profitability?

    <p>Urbanisation and an aging population</p> Signup and view all the answers

    Which factor falls under social influence in the business environment?

    <p>Growing desire to provide family-friendly workplaces</p> Signup and view all the answers

    What does legal influence on the business environment refer to?

    <p>The laws and regulations applied to businesses</p> Signup and view all the answers

    Which aspect is covered under the legal influence on the business environment?

    <p>Equal employment opportunity</p> Signup and view all the answers

    What is a consequence for businesses if they fail to comply with laws and regulations?

    <p>Fines</p> Signup and view all the answers

    Which law is an example of legal influence mentioned in the text?

    <p>Competition and Consumer Act (2010)</p> Signup and view all the answers

    Which regulatory body is the primary environment regulator for NSW?

    <p>NSW Environment Protection Authority</p> Signup and view all the answers

    What is the main aim of trade unions as mentioned in the text?

    <p>To improve working conditions and pay rates</p> Signup and view all the answers

    What has led to the decline in union membership in the past 20 years according to the text?

    <p>Increased part-time and casual work</p> Signup and view all the answers

    Which organization monitors market integrity and provides consumer protection in payment systems and financial services?

    <p>Australian Securities and Investments Commission</p> Signup and view all the answers

    What has revolutionized the way businesses operate by enabling rapid transfer of information as per the text?

    <p>Technological advancements</p> Signup and view all the answers

    Which of the following is responsible for providing information and assistance to all consumers as mentioned in the text?

    <p>NSW Fair Trading</p> Signup and view all the answers

    What factor contributed to the substantial decline in union membership in the past 20 years as per the text?

    <p>New legislation outlawing compulsory unionism</p> Signup and view all the answers

    What has the Australian Securities and Investments Commission been tasked with according to the text?

    <p>Monitoring market integrity and providing consumer protection</p> Signup and view all the answers

    In a monopolistic competition market structure, how do businesses differentiate themselves?

    <p>By using price as a differentiator</p> Signup and view all the answers

    What does a sustainable competitive advantage in business refer to?

    <p>The ability to develop strategies that give an edge over competitors for an extended period</p> Signup and view all the answers

    How would an increase in labour costs impact local competitors compared to foreign competitors?

    <p>Local competitors will face more challenges due to increased labour costs.</p> Signup and view all the answers

    What characterizes an oligopoly market structure?

    <p>A small number of larger firms having greater control over the market</p> Signup and view all the answers

    Which factor influences a business's decision on where to source its supplies and define its target markets?

    <p>Labour costs and transport costs</p> Signup and view all the answers

    What differentiates perfect competition from monopolistic competition?

    <p>Large number of small firms selling similar products</p> Signup and view all the answers

    How does the presence of barriers to entry impact the competitiveness in a market?

    <p>It limits new firms from easily entering and competing.</p> Signup and view all the answers

    How do foreign and local competitors differ in terms of their operational locations?

    <p>Local competitors must deal with similar variables as each other while foreign competitors face different conditions.</p> Signup and view all the answers

    In a monopoly situation where one firm controls all resources being sold, what is the likely impact on competition?

    <p>Competition will decrease as the controlling firm has a significant advantage.</p> Signup and view all the answers

    What is a key characteristic of monopolies in terms of market concentration?

    <p>Complete concentration by one firm in the industry</p> Signup and view all the answers

    What has been a significant reason for the substantial decline in union membership in the past 20 years?

    <p>New legislation that outlaws compulsory unionism</p> Signup and view all the answers

    Which regulatory body is responsible for monitoring market integrity and providing consumer protection in payment systems and financial services?

    <p>The Australian Securities and Investments Commission</p> Signup and view all the answers

    What is the main aim of the NSW Environment Protection Authority?

    <p>Improving environmental performance and waste management for NSW</p> Signup and view all the answers

    What has revolutionized the way businesses operate by enabling rapid transfer of information?

    <p>Technological advancements</p> Signup and view all the answers

    Which organization acts as the primary environment regulator for NSW?

    <p>NSW Environment Protection Authority</p> Signup and view all the answers

    Which entity aims to improve working conditions and pay rates?

    <p>Trade unions</p> Signup and view all the answers

    What is the main role of NSW Fair Trading according to the text?

    <p>Providing consumer protection</p> Signup and view all the answers

    Which entity focuses on environmental performance and waste management in NSW?

    <p>NSW Environment Protection Authority</p> Signup and view all the answers

    How can changes in labor markets impact businesses?

    <p>By affecting recruitment and retention</p> Signup and view all the answers

    What factor can significantly influence investment decisions and overall financial health of businesses?

    <p>Fluctuations in interest rates</p> Signup and view all the answers

    What determines the type and extent of marketing strategies a business will employ?

    <p>The nature of the products</p> Signup and view all the answers

    Study Notes

    Economic Influences on the Business Environment

    • Inflation: a rise in prices of goods and services, leading to decreased purchasing power
      • High inflation: increased prices, high borrowing costs, hindered investments, decreased customer spending
      • Low inflation: decreased prices, low borrowing costs, promoted investments, increased customer spending
    • Exchange Rates: value of one currency compared to another, impacting international trade, investment, and economic activities
      • Depreciating: value of Australian dollar compared to other currencies is falling, cheap exports, expensive imports
      • Appreciating: value of Australian dollar compared to other currencies is increasing, cheaper imports, expensive exports
    • Interest Rates: cost of borrowing or return on investments, influencing borrowing and investing decisions
      • Increasing: reduces customer spending, increases business expenses
      • Decreasing: increases consumer spending, decreases business expenses
    • Government Expenditure: increased government spending may result in higher taxes, potentially reducing consumer spending
      • Covers spending on goods and services like infrastructure, healthcare, education, defence, and social welfare programs
      • Boosts employment, stimulating consumer spending
    • Economic Cycle: natural fluctuation of economic activity, including four stages: expansion, peak, contraction, and trough
      • Businesses and policymakers use this pattern to make strategic decisions about employment, production, and overall economic health

    Institutional Influences on the Business Environment

    • Federal Obligations: payment of taxes for employees, provision of employee superannuation, and abiding by relevant legislation regulations
    • State Obligations: provision of employee entitlements, payment of payroll taxes, and abiding by relevant state legislation
    • Local Obligations: approving new development and alterations, fire regulations, and parking regulations
    • Regulatory Bodies: NSW Environment Protection Authority, NSW Fair Trading, The Australian Securities and Investments Commission, and trade unions

    Social Influences on the Business Environment

    • Demographic Shifts: urbanisation and an aging population impact business profitability
    • Changes in Taste, Fashion, and Culture: impact businesses and influence areas such as employee productivity and efficiency
    • Growing Awareness of Environmental Vulnerability: businesses must adapt to changing social values
    • Diversity and Family-Friendly Workplaces: businesses must consider these factors in their operations

    Technological Influences on the Business Environment

    • Revolutionised the way businesses operate by enabling rapid transfer of information, enhancing efficiency and productivity

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    Related Documents

    External Influences on Business PDF

    Description

    This quiz covers the external influences of the business environment, focusing on economic factors such as production, distribution, trade, and consumption of goods and services. Explore the key factors that influence economies, including resources, technology, government policies, and more.

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