EDEXCEL GCSE BUSINESS · PAPER 1
Exam Practice: The Economy and Business
The economy and business · Understanding external influences on business · Lesson 4 of 5 · 10 marks · 25 minutes
Name Date
Answer all questions. Show your working in calculations.
Question 1 DEFINE [1 mark]
Define the term 'inflation'.
Question 2 CALCULATE [2 marks]
The price of a bag of flour a bakery buys has risen from £2.50 to £2.75. Calculate the percentage increase in price. You are advised to show your working.
Question 3 CALCULATE [2 marks]
A UK business sells a jacket for £60 to customers in Germany. The exchange rate is £1 = €1.15. Calculate the price of the jacket in euros. You are advised to show your working.
Question 4 OUTLINE [2 marks]
Outline one way rising unemployment could affect a small restaurant.
Question 5 EXPLAIN [3 marks]
Explain one impact on a small business of a rise in interest rates.
Answers
Check your answer only once you have written one.
Question 1 [1 mark]
A rise in the general level of prices over time.
▸ Rising prices / increase in the general price level 1 mark
Question 2 [2 marks]
(£2.75 - £2.50) ÷ £2.50 × 100 = £0.25 ÷ £2.50 × 100 = 10%
▸ Correct method: (new - old) ÷ old × 100 1 mark
▸ Correct answer: 10% 1 mark (award 2 marks for the correct answer with no working)
Question 3 [2 marks]
£60 × 1.15 = €69
▸ Correct method: £60 × 1.15 1 mark
▸ Correct answer: €69 1 mark (award 2 marks for the correct answer with no working)
Question 4 [2 marks]
Its sales could fall (1), because people who have lost their jobs have less income and cut back on non-essentials such as eating out (1).
▸ An effect identified, e.g. lower sales / easier to recruit staff 1 mark
▸ Developed in the context of a restaurant 1 mark
Question 5 [3 marks]
The cost of its loan repayments would increase (1). If the business has borrowed money, it must pay more interest each month, raising its costs (1). This reduces its profit and could cause cash-flow problems if the business cannot increase its revenue (1).
▸ An impact identified, e.g. higher borrowing costs / customers spend less / delay expansion 1 mark
▸ First linked point of explanation 1 mark
▸ Second linked point of explanation 1 mark