S-Cool Revision Summary

S-Cool Revision Summary

Balance of payments.

This is a record of a country's financial transactions with the rest of the world over a given period of time (normally 12 months). It records the flows of imported and exported goods and services, as well as any flows of capital into and out of the country.

Deregulation.

This is the removal of any government rules and regulations from the operation of an industry, often allowing new competitors to enter the industry.

Devaluation.

This is the decision by the government of a country to reduce the value of its currency in relation to foreign currencies. This boosts the international competitiveness of the country's exports, by making them cheaper for other countries to purchase.

Direct taxation.

This is tax that is paid directly from the income, wealth or profit of an individual or a business (e.g. income tax, corporation tax).

Economic growth.

This term refers to a growth in the income per capita (or income per head) of the population over a given period of time. It is normally measured by reference to G.D.P. and G.N.P.

Environmental audit.

This is an independent and critical review and appraisal of the business in aspects such as its levels of pollution, waste and recycling. An environmental audit is often carried out as part of a social audit.

Ethics.

These are moral principles and judgements that many people believe should be considered when a business makes any decision.

European Union (E.U).

This was formed in 1993, following the Maastricht Treaty, replacing the European Community (E.C). It consists of the following 15 member countries: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, and the UK. The Treaty of Rome (1957) established the E.E.C, and the main objective was to remove all the trade barriers (financial, physical and technical) between the member states.

Exchange rate.

This is the external price of a country's currency, expressed in terms of another currency.

External costs.

These are the detrimental consequences of the activities of a business that are paid for by society as a whole (e.g. pollution, congestion).

Fiscal policy.

This is a government policy which deals with raising finance (through taxation) and then spending this finance on public services such as education, health, transport).

Gross Domestic Product (G.D.P).

This is the total value of a country's output over a period of time (usually 12 months). It is used to indicate changes in economic growth and the standard of living in a country.

Gross National Product (G.N.P).

This is calculated by adding G.D.P. to the net income from abroad (i.e. the income earned on overseas investments by UK citizens and businesses, minus the income earned by foreigners investing in the UK). Again, G.N.P. is a main indicator of changes in economic growth and the standard of living in a country.

Indirect Taxation.

This is tax that is paid on goods and services, (e.g. VAT and excise duty).

Inflation.

This is a general and sustained rise in the average prices of goods and services within an economy over a period of time. It is calculated by reference to the Retail Price Index (R.P.I).

Monetary policy.

This is a government policy which is designed to control the amount of spending in an economy, by altering the money supply, interest rates, exchange rates and the amount of credit available to customers.

Monopolies and Mergers Commission (M.M.C).

This is an organisation that was established by the government in 1948, designed to investigate and monitor proposed mergers and takeovers of large businesses and to ensure that any businesses with monopoly power do not act against the public interest. In general, any business with a market share of 25% or more is likely to be investigated.

Nationalisation.

This occurs when businesses and industries are transferred from the private sector to the public sector.

Office of Fair Trading (O.F.T).

This is a government body, which was established to ensure that businesses were meeting the requirements of the Fair Trading Act 1973. It has the power to recommend any business to the M.M.C. for further investigation, if it feels that they are acting against the public interest. 

Pressure group.

This is an organisation that develops in order to tackle a matter of vital interest to the members of the group, such as campaigning against businesses which cause pollution, or test their products on animals, or cause environmental damage. Pressure groups aim to raise as much publicity and awareness of their cause as possible, in the hope that this will stop the businesses from continuing their actions.

Privatisation.

This generally refers to the transfer of large businesses from the public sector to the private sector (i.e. from a nationalised industry to a P.L.C).

Protectionism.

This refers to a government's policies of protecting its domestic businesses from more competitive foreign imported goods, by using barriers such as quotas and tariffs.

Quotas.

These are a method that a government can use to protect its economy from a large influx of more competitive foreign imports. A quota places a physical restriction on the number of units of a product that are allowed to enter the country.

Recession.

This refers to a situation where the G.D.P. of an economy has fallen for two successive quarters. It is characterised by falling customer demand, low investment, and rising unemployment.

Regional Policy.

This is a government policy which attempts to reduce regional inequalities of employment, income and wealth, by investing money in, and enticing businesses to move to, the less affluent areas of the country.

Social Audit.

This is an independent and critical review and appraisal of the business in aspects such as its level of pollution, its use of recycled materials, and the health and safety of the workforce.

Social Cost.

This measures the total cost to society of the activities of a business. Social costs are equal to the internal costs of the business plus the external costs faced by society.

Social Responsibilities.

These are the duties that a business has towards the people who are affected by its activities (e.g. customers, employees, suppliers, the local community).

Tariff.

This is another method that a government can use to protect its domestic businesses from a large influx of more competitive foreign imports. A tariff is a tax placed on an imported good.

Trade Cycle.

This refers to the fluctuation of employment, income and wealth in a country over time. Terms such as 'recession', 'slump', 'recovery', and 'boom' are associated with the trade cycle.

Unemployment.

This refers to the number of people in the workforce in a country who are looking for a job, but cannot find one.