Lesson 1.5.4a

1.5.4a Unemployment, consumer income and inflation Quiz: Pearson Edexcel Business, Unit 5

20 questions

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Lesson 1.5.4a, Unemployment, consumer income and inflation: 20 multiple choice questions for the Pearson Edexcel GCSE Business (1BS0), Unit 5: Understanding external influences on business, written with Revision Ninja.

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The 20 questions

  1. What typically happens to consumer spending when unemployment rises?

    • Consumer spending falls
    • Inflation disappears
    • Incomes increase
    • Spending doubles

  2. Which type of business benefits most from a rise in consumer income?

    • Basic groceries
    • Inferior goods
    • Luxury goods
    • Giffen goods

  3. What term describes a general rise in the price level of goods over time?

    • Inflation
    • Stagnation
    • Deflation
    • Recession

  4. What effect does high inflation typically have on business input costs?

    • Eliminates costs
    • Increases costs
    • Decreases costs
    • Stabilises costs

  5. What is a main advantage for a business during a period of high unemployment?

    • Lower taxes
    • Higher sales
    • Increased revenue
    • Easier recruitment

  6. Which economic change would most likely hurt the sales of luxury holidays?

    • Higher wages
    • Lower inflation
    • Falling income
    • Rising employment

  7. How are sales of basic goods usually affected during a recession?

    • Stop entirely
    • Fall heavily
    • Double rapidly
    • Fall slightly

  8. Which factor is most likely to cause a business's raw material costs to rise?

    • Deflation
    • Inflation
    • Deregulations
    • Recession

  9. Which category of goods suffers the greatest drop in demand when consumer income falls?

    • Utility services
    • Luxury goods
    • Essential food
    • Basic goods

  10. What happens to total household spending when unemployment rises significantly?

    • Spending doubles
    • Spending stays flat
    • Spending falls
    • Spending rises

  11. Which business is most exposed when consumers cut back on discretionary spending?

    • Discount supermarket
    • Utility provider
    • Fine dining restaurant
    • Budget pharmacy

  12. What is the main problem for consumers when inflation rises rapidly?

    • Reduced purchasing power
    • Cheaper imports
    • Higher job security
    • Increased savings value

  13. What is a likely business response to falling consumer disposable income?

    • Stop advertising entirely
    • Hiring freeze only
    • Launch cheaper products
    • Raise all prices

  14. How can high local unemployment affect wage rates for a business?

    • Wages become illegal
    • Wages must double
    • Wages are fixed
    • Wages may fall

  15. What pricing action might a business take to protect profit margins during inflation?

    • Raise prices
    • Offer discounts
    • Lower prices
    • Freeze prices

  16. What is a sensible first response for a business experiencing falling sales?

    • Liquidate assets
    • Double dividends
    • Review costs
    • Close business

  17. What is a major potential advantage of high unemployment for a business?

    • Greater revenue
    • Lower labour costs
    • Increased demand
    • Higher sales

  18. Why do businesses monitor consumer income and inflation closely?

    • To hire staff
    • To forecast demand
    • To set tax rates
    • To check health

  19. What is the likely impact on demand when household income rises?

    • Demand rises
    • Demand remains unchanged
    • Demand stops entirely
    • Demand falls

  20. What does a fall in national unemployment typically mean for a business?

    • Cheaper labour
    • More customers
    • Fewer competitors
    • Lower wage bills

All Pearson Edexcel Business quizzes