The "Comprehensive IGCSE Business Studies Definitions Handbook" is an indispensable resource designed to support students, in mastering the fundamental concepts of business studies at the IGCSE level. It covers Section 6 of the IGCSE syllabus
Section 6 revision keywords and questions
Key terms Definition
Gross domestic product
(GDP)
Gross Domestic Product (GDP) is the total value of output of goods and
services in a country in one year
Inflation Inflation is the increase in the average price level of goods and services over
time.
Unemployment exists when people who are willing and able to work cannot
Unemployment
find a job.
Economic growth is when a country’s GDP increases – more goods and services
Economic growth are produced than in the previous year.
The balance of payments records the difference between a country’s exports
Balance of payments
and imports.
Business cycle
Recession A recession is when there is a period of falling GDP.
Boom – This is caused by too much spending. Prices start to rise quickly and
Boom there are shortages of skilled workers. Business costs will be rising, and
businesses will become uncertain about the future.
Direct taxes are paid directly from incomes, for example, income tax or profits
Direct tax tax.
,Classification: Internal
Indirect taxes are added to the prices of goods and taxpayers pay the tax as
Indirect tax
they purchase the goods, for example, VAT.
Disposable income Disposable income is the level of income a taxpayer has after paying income
tax
An interest rate is the cost of borrowing money. In most countries, the level of
Interest rates interest rates is fixed by the government or the central bank via monetary
policy.
Social responsibility is when a business decision benefits stakeholder other
Social responsibility than shareholders, for example, a decision to protect the environment by
reducing pollution by using the latest and ‘greenest’ production equipment.
Private costs Private costs of an activity are the costs paid for by a business or the consumer
of the product.
External costs are costs paid for by the rest of society, other than the business,
External costs
as a result of business activity.
Social costs
Social cost = external costs + private costs
Private benefits of an activity are the gains to a business or the consumer of
Private benefits
the product.
External benefits are the gains to the rest of society, other than the business,
External benefits as a result of business activity
Social benefit = external benefits + private benefits.
Social benefits
A business’ decisions and actions can have significant effects on its
Externalities stakeholders. These effects are termed ‘externalities’
,Classification: Internal
Sustainable Sustainable development is development which does not put at risk the living
development/production standards of future generations.
Pressure groups are groups of people who act together to try to force
Pressure group businesses or governments to adopt certain policies.
A consumer boycott is when consumers decide not to buy products from
Consumer boycott businesses that do not act in a socially responsible way
Ethical decisions are based on a moral code. Sometimes referred to as ‘doing
Ethical the right thing’.
Misleading communication, fraudulent behaviour, anticompetitive activity,
knowledge hiding, withdrawal, and production deviance are unethical
Unethical
business practices. It is illegal but not unethical to force an employee to work
off their stipulated time.
Globalisation is the term now widely used to describe increases in worldwide
Globalisation trade and movement of people and capital between countries.
Protectionism is when a government protects domestic businesses from
Protectionism policies foreign competition using tariffs and quotas.
An import quota is a restriction on the quantity of a product that can be
imported.
Quota
An import tariff is a tax placed on imported goods when they arrive into the
Tariff country.
, Classification: Internal
Free trade agreements exist when countries agree to trade imports/exports
Free trade agreements with no barriers such as tariffs and quotas.
Multinational businesses are those with factories, production or service
Multinational companies operations in more than one country. These are sometimes known as
(MNCs) transnational businesses.
Exchange rate is the price of one currency in terms of another currency, for
Exchange rate example £1 = $1.50
Currency appreciation occurs when the value of a currency rises – it buys more
Currency appreciation
of another currency than before.
Currency depreciation Currency depreciation occurs when the value of a currency falls – it buys less
of another currency.
Revision questions
» Low inflation
What are the 4 government
economic objectives?
» low unemployment
» economic growth
» balance of payments between imports and exports
»Prices of products may have to be increased, leading to falling sales for
2 impacts of inflation on a
business
the business.
»Rising prices of essential products may also mean consumers have less
income available for the purchase of non-essential products
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