Edexcel GCSE Business Studies: The Economic Context Quiz

If £1 is equivalent to $1.80, then a £1,000 order of British cheese will sell in the USA for $1,800. This is because the exchange rate states that for every £1, the equivalent value in USD is $1.80. Therefore, to calculate the value of a £1,000 order in USD, we need to multiply £1,000 by $1.80, resulting in $1,800.

If the price of petrol rises, it will directly impact the small delivery firm as their costs will increase. As petrol is a major expense for delivery firms, the rise in its price will lead to higher costs for the firm. In order to cover these increased costs, the firm might consider increasing their prices. Therefore, the statement "The firm's costs rise and so might prices" best describes the effect on the small delivery firm.

If £1 is equal to $1.50, then to find the cost of a $450 weekend break in New York for a UK customer, we need to convert the dollars to pounds. Since £1 is equal to $1.50, we can divide $450 by 1.50 to get the cost in pounds. Therefore, the cost of the weekend break for a UK customer would be £300.

The correct answer is "A good or service they sell overseas." This statement accurately describes an export for a UK firm. When a UK firm sells a good or service to a foreign country, it is considered an export. This can include products like manufactured goods, technology, or even intangible services like consulting or software development.

If the interest rate rises, consumers will save more and borrow and spend less. This is because higher interest rates make it more expensive to borrow money, so consumers are likely to be more cautious with their spending and opt to save instead. Higher interest rates also provide a greater incentive for consumers to save as they can earn more on their savings. Overall, the increase in interest rates encourages consumers to be more conservative with their finances, resulting in increased savings and reduced borrowing and spending.

When interest rates fall, it becomes cheaper for firms to borrow money because they will have to pay lower interest rates on their loans. This means that firms can access more affordable financing options, allowing them to invest in new projects, expand their operations, or make necessary purchases. Lower borrowing costs can also incentivize firms to take on more debt, leading to increased spending and economic growth. Therefore, the statement that it becomes cheaper for firms to borrow money is a logical consequence of falling interest rates.

When the £ (British pound) is weaker, it means that its value has decreased compared to other currencies. This leads to exports becoming cheaper because foreign buyers can now purchase more goods with their own currency. On the other hand, imports become more expensive because it takes more £ to buy the same amount of foreign goods. Therefore, the correct answer is "Exports become cheaper, imports become more expensive."

When prices are low, demand is relatively high because consumers are more willing and able to purchase goods or services at a lower price. Lower prices make products more affordable and accessible, which increases the desire for them. As a result, demand for these goods or services tends to rise when prices are low.

Nike trainers are not considered a commodity because they are a branded product that is not standardized or interchangeable. Commodities are typically raw materials or basic goods that are traded on exchanges and are uniform in quality and value. Gold, wool, coffee, and money are all examples of commodities as they can be traded and their value is determined by market forces.

The increase in the number of manufacturers making chocolate is likely the reason why the price of chocolate has fallen. When there are more manufacturers in the market, there is increased competition, which can lead to lower prices as companies try to attract customers. This increase in supply can result in a decrease in price, as there is more chocolate available to meet the demand.

If the £ becomes stronger, it means that the exchange rate of the British pound increases in value compared to other currencies. This would make UK products more expensive for overseas buyers, which could lead to a fall in overseas sales for UK manufacturers. As the prices of UK goods increase, foreign customers may choose to buy products from other countries instead. This could negatively impact UK manufacturers' ability to sell their products internationally.

In a boom, unemployment will be low because economic growth typically leads to increased job opportunities and a higher demand for labor. Prices may begin to rise at a faster pace because increased demand for goods and services can lead to inflationary pressures. However, the other statements are not necessarily true in a boom. While some firms may need to borrow money to finance expansion, it is not true that most firms will need to do so. Cheaper goods and services may not necessarily sell well in a boom as consumers may have more disposable income and be willing to spend on higher-quality or luxury items. Import volumes may not necessarily fall in a boom as increased economic activity can lead to higher demand for imported goods.

In a recession, suppliers of luxury goods will often find that sales revenue falls because consumers tend to cut back on discretionary spending during economic downturns. Additionally, output falls and unemployment rises as businesses reduce production and lay off workers in response to decreased demand. These two statements accurately reflect the impact of a recession on suppliers of luxury goods and the overall economy.

If firms can correctly forecast future economic conditions, they are more likely to need to borrow money from a bank. This is because they can anticipate and plan for potential financial challenges and take proactive measures to secure additional funding if needed.