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Economic Influences (2.5.1) - Coggle Diagram
Economic Influences (2.5.1)
Government Spending
Impacts of business change on Taxation
Impact on consumer spending
Depends on what type of goods firm sells (inferior or normal?)
Impact on Profits
Impact on expansion due to change in level of costs
Impact on employment - pressure for pay rises from employees
Impact on competitiveness compared to oversea firms in same industry
Impacts of business change on Government Spending
Impacts inflation and interest rates as government are contributing to economic activity
Opportunities for business if spending is increased due to new opportunities and problems arising that need to be solved
Fiscal Policy
When the government manipulates taxation and the level of government spending to affect the economy
Inflation
Measured by a basket of goods value
Impacts
Can reduce demand as consumers exercise caution and are more likely to save due to the benefits
May lead to pay negotiations with employees
Can increase costs for businesses leading some to increase their price to compensate and keep profit margins
May make new markets with less inflation more attractive
Highly geared companies should be cautious
Business Cycle