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Level 2 Business and Economics: The Economic Context of Business
IntroductionAll businesses are part of the economy, but rarely do they have a great deal of control over it. The way the economy works has a significant influence on business. This resource looks at some of these main factors that affect a business. We will look at:
Interest rates and the exchange rate are also important factors affecting businesses. You can find out more about these in another Biz/ed resource on external influences. The economy is made up of individuals, businesses and government. The economy has two parts: the private sector and the public sector. Every day there are individuals, businesses and governments engaged in economic activity. What we mean by this is all the buying and selling that goes on every day. It might be something simple like going into a local shop on your way to school to buy a snack through to the government announcing plans to build a new hospital. 
Decisions about what to buy and when from individuals, government and businesses drives the whole economy - the sums of money are difficult to imagine! Copyright: Sanja Gjenero, from stock.xchng. Every act of buying and selling - no matter how large or small - contributes to what we call 'the economy'. Decisions by individuals, businesses and the government on whether they are going to buy or sell are influenced by the factors in the list above. The overall effect depends on how many people make decisions on whether to buy or sell. This is part of the difficulty with this section - it is all about millions of decisions, but it is difficult for us to be able to appreciate that every decision has an importance in its own way. The resource will try to help you build up your knowledge of the key parts in the economy. Try to answer the questions as you go through it to help build up your understanding of this area. Pages in the Series |
