Topic Six (1.6): Economic Influences 1
Introduction
In this topic you will learn about how governments support business activity and deal with market failure, how and why governments set macroeconomic objectives, and how government economic objectives impact business activity and influence a business’s decision-making process and strategy.
Read and Make Notes
Read pages 98 to 108 in Chapter 7 of your textbook and make notes under the following headings:
-
- Government support for business activity;
- Government assistance for entrepreneurs;
- Government assistance for all businesses;
- How governments deal with market failure;
- Examples of market failure;
- Correcting or controlling market failure;
- Macroeconomic objectives of governments;
- How economic objectives and performance impact business activity;
- Economic growth;
- Benefits of economic growth;
- Causes of economic growth;
- The business cycle;
- Is a recession always bad?;
- Inflation and deflation;
- Causes of inflation;
- The impact of low inflation on business decisions;
- The impact of high inflation on business decisions;
- Is deflation beneficial?;
- Unemployment;
- Causes of unemployment;
- Cyclical unemployment;
- Structural unemployment;
- Frictional unemployment;
- The costs of unemployment;
- Impact of unemployment on business activity.
Tasks
Now watch the following videos and add to your notes:
WATCH – Macroeconomic Objectives (2020 Update) (tutor2u) Links to an external site.
WATCH – Inflation and Business (tutor2u) Links to an external site.
WATCH – Inflation and Deflation – 2021 Revision Update (tutor2u) Links to an external site.
Activities in the Book
- Complete Activities 7.1, 7.2 and 7.3 in Chapter 7 of your textbook.
- Suggested answers can be found in the digital textbook and in General Resources.
Consolidate
The following video will help draw together what you have learnt so far. Watch it and add to your notes:
Terminology
- Write down (in your own words) definitions of all the key terms from Chapter 7 (pages 98 to 108).
- Tick off these terms on your glossary.
- A helpful tip is to make flashcards for key terms as you go along, with the word on one side and the definition on the other. This makes revision later on much easier.