1.5.4 The Economy and Business

• What does the economic environment refer to?

  The overall state of the economy
• Match the economic condition with its impact on business.

  1️⃣ High Economic Growth

  2️⃣ Increased demand, higher sales

  3️⃣ High Inflation

  4️⃣ Higher costs, increased prices
• Match the type of economic system with its key characteristic.

  Market Economy ↔️ Driven by supply and demand

  Command Economy ↔️ Centralized government control

  Mixed Economy ↔️ Combination of market forces and government intervention
• Exchange rates impact the competitiveness of exports and imports.


  True
• In a mixed economy, both market forces and government intervention play a role.


  True
• In a command economy, centralized government control manages the production and distribution of goods and services
• What does the choice of economic system significantly impact?

  Business operations
• What do interest rates impact for businesses?

  Borrowing costs
• How do exchange rates impact businesses?

  Export competitiveness
• In a contraction phase, businesses reduce costs to protect their core customer base
• How does inflation affect businesses?

  Increases costs and prices
• What are key economic indicators that businesses need to monitor?

  GDP growth, inflation, interest rates
• What is the impact of high economic growth on businesses?

  Increased demand, higher sales
• A market economy is driven by supply and demand with minimal government intervention.


  True
• The inflation rate influences pricing, costs, and purchasing power
• During the expansion phase of the economic cycle, businesses typically invest in capacity and hire more staff.


  True
• Match the government policy with its impact on businesses:

  Fiscal Policy ↔️ Affects costs, consumer demand, and investment decisions

  Monetary Policy ↔️ Influences borrowing costs, inflation, and consumer spending

  Trade Policy ↔️ Impacts international competitiveness and access to global markets
• High interest rates lead to increased borrowing costs
• In a command economy, businesses and consumers make decisions based on prices and profits.

  False
• Which key economic indicator affects overall demand for products and services?

  GDP Growth
• Which economic indicator impacts the competitiveness of exports and imports?

  Exchange Rates
• Fiscal policy, such as taxation, affects consumer demand and investment decisions
• Economic growth impacts demand for goods and services
• The economic environment includes factors such as interest rates and exchange rates.


  True
• In a command economy, the government decides what and how much to produce
• Match the economic indicator with its impact on businesses.

  GDP Growth ↔️ Overall demand for products

  Inflation Rate ↔️ Influences pricing and costs

  Interest Rates ↔️ Impact borrowing costs

  Unemployment Rate ↔️ Affects labor availability

  Exchange Rates ↔️ Impacts international competitiveness
• What are the three main types of economic systems?

  Market, Command, Mixed
• Match the economic system with its description:

  Market Economy ↔️ Businesses and consumers make decisions based on prices and profits

  Command Economy ↔️ The government decides what and how much to produce

  Mixed Economy ↔️ Combines market forces with government intervention
• GDP growth affects the overall demand for products and services.


  True
• The unemployment rate affects labor availability and wage levels.


  True
• Phases of the economic cycle in order:

  1️⃣ Expansion

  2️⃣ Peak

  3️⃣ Contraction

  4️⃣ Trough
• What must businesses understand to navigate the economic cycle effectively?

  Each phase
• Economic growth impacts the demand for goods and services.


  True
• What type of economy combines market forces and government intervention?

  Mixed Economy
• Match the type of economic system with its key characteristic:

  Market Economy ↔️ Minimal government intervention

  Command Economy ↔️ Centralized government control

  Mixed Economy ↔️ Combination of market forces and intervention
• Interest rates affect borrowing costs and investment decisions.

  True
• Order the phases of the economic cycle:

  1️⃣ Expansion

  2️⃣ Peak

  3️⃣ Contraction

  4️⃣ Trough
• What strategic adjustment should businesses make during a contraction phase of the economic cycle?

  Reduce costs
• Match the international trade factor with its impact on businesses:

  Exchange Rates ↔️ Affect export competitiveness

  Tariffs ↔️ Increase import costs

  Trade Agreements ↔️ Open new markets
• What are the key components of the economic environment?

  Economic growth, inflation, interest rates, unemployment, exchange rates