Question 1: Define 'economic influence' and give one example of how it can affect a business.

Answer: Economic influence refers to factors related to the economy that can impact a business's operations or sales. For example, a rise in unemployment may reduce consumer spending, affecting sales.

Question 2: Explain how a decrease in interest rates might benefit small businesses.

Answer: Lower interest rates make borrowing cheaper, allowing small businesses to take loans for expansion or investment, which can lead to increased growth.

Question 3: Describe what might happen to a luxury car manufacturer during an economic recession.

Answer: During a recession, consumers often cut back on non-essential spending, so sales of luxury cars may decline, leading to reduced revenue for the manufacturer.

Question 4: Identify and explain two ways in which inflation can impact a business.

Answer: Inflation can increase the costs of raw materials, raising expenses for the business. It can also lead to higher prices for consumers, which might reduce demand for products or services.

Question 5: Sketch a simple diagram showing the relationship between economic growth and business investment. Label your diagram clearly.

Answer: A correct sketch would show two axes: one labeled 'Economic Growth' (x-axis) and the other 'Business Investment' (y-axis). The diagram should depict a positive correlation, with an upward-sloping line indicating that as economic growth increases, business investment tends to increase.

Question 6: A country experiences a sudden increase in taxes. How might this affect a local bakery?

Answer: Higher taxes increase costs for the bakery, which might lead to higher prices for customers, reduced profit margins, or a decision to cut costs elsewhere.

Question 7: Explain the term 'economic recession' and how it can influence consumer behaviour.

Answer: An economic recession is a period of declining economic activity across the economy. Consumers tend to spend less during a recession, which can lead to decreased sales for businesses.

Question 8: Draw a basic chart illustrating how unemployment rates can affect consumer confidence. Provide a brief description of your chart.

Answer: A correct chart would have unemployment rate on the x-axis and consumer confidence on the y-axis. The trend line should slope downward, indicating that as unemployment increases, consumer confidence decreases.

Question 9: Identify one economic factor that could lead to increased costs for a clothing retailer and explain its impact.

Answer: An increase in the price of cotton could raise the cost of producing clothing, which might lead to higher retail prices and potentially lower sales.