Unit 38 Business and the Economic environment
Impact of Economic Change on a Selected Business
P1 explain the effects, of changes in the economic environment on a selected business
Introduction
In this part of the assignment I will explain the effects, of changes in the economic environment on a
selected business. The selected business which I have chosen is Tesco, which is well-known
supermarket in the United Kingdom and internationally.
Business Cycle
The business cycle is often known as the economic cycle, the cycle is a concept used by many
individuals to predict within what stage the economy is in and thus what effects this may bring upon
many organisations. The business cycle ultimately shows and predicts increases falls and increases
production, income and expenditure within an economy over a period of time. Predictions made
about the economy are often calculated in quarters, within each year there are four quarters each
lasting a period of three months. The economic cycle currently is viewed as having four different
stages boom, recession, slump and recovery. The government will often implement a variety of
policies based on what situation or stage the economy is currently in. The four different stages of the
economic cycle in terms of their nature are outlined below:
Boom
A boom is often seen as the period of the economic cycle within which the economy will prosper it is
however worth acknowledging that although during this stage of the cycle the economy will
experience high levels of growth, it is ultimately not desirable for any economy. A boom will often
occur when levels of aggregate demand in the economy are at high levels an increase in aggregate
demand within the economy is desirable however when increases in aggregate demand continue to
occur at high levels, inflation can occur which is the overall increase in prices of goods and services
over a period of time. Inflation is however not desirable as for consumers the prices of goods and
services will increase leading to a fall in consumer spending eventually adding to unemployment
within the economy. A boom as a result of increases in aggregate demand within the economy will
often see the economy lead to increases in real national output, the total amount of goods and
services within the economy an indication of falling levels of unemployment which is desirable
within any economy as this indicates a period of strong economic growth.
Recession
A recession will occur within the economy when aggregate demand in the economy continues to fall
over a period of time. A recession will occur when the economy experiences a decline in economic
growth for more than two consecutive quarters. A recession is however not desirable for any
economy as during this period of time, unemployment will continue to rise as aggregate demand
within the economy continues to fall leading to a fall in real national output, the total amount of
goods and services produced within an economy over a period of time. A recession will as a result of
the falling levels of aggregate demand within the economy lead to deflation within the economy, it is
worth acknowledging that this means a fall in the average prices of goods and services within the
Impact of Economic Change on a Selected Business
P1 explain the effects, of changes in the economic environment on a selected business
Introduction
In this part of the assignment I will explain the effects, of changes in the economic environment on a
selected business. The selected business which I have chosen is Tesco, which is well-known
supermarket in the United Kingdom and internationally.
Business Cycle
The business cycle is often known as the economic cycle, the cycle is a concept used by many
individuals to predict within what stage the economy is in and thus what effects this may bring upon
many organisations. The business cycle ultimately shows and predicts increases falls and increases
production, income and expenditure within an economy over a period of time. Predictions made
about the economy are often calculated in quarters, within each year there are four quarters each
lasting a period of three months. The economic cycle currently is viewed as having four different
stages boom, recession, slump and recovery. The government will often implement a variety of
policies based on what situation or stage the economy is currently in. The four different stages of the
economic cycle in terms of their nature are outlined below:
Boom
A boom is often seen as the period of the economic cycle within which the economy will prosper it is
however worth acknowledging that although during this stage of the cycle the economy will
experience high levels of growth, it is ultimately not desirable for any economy. A boom will often
occur when levels of aggregate demand in the economy are at high levels an increase in aggregate
demand within the economy is desirable however when increases in aggregate demand continue to
occur at high levels, inflation can occur which is the overall increase in prices of goods and services
over a period of time. Inflation is however not desirable as for consumers the prices of goods and
services will increase leading to a fall in consumer spending eventually adding to unemployment
within the economy. A boom as a result of increases in aggregate demand within the economy will
often see the economy lead to increases in real national output, the total amount of goods and
services within the economy an indication of falling levels of unemployment which is desirable
within any economy as this indicates a period of strong economic growth.
Recession
A recession will occur within the economy when aggregate demand in the economy continues to fall
over a period of time. A recession will occur when the economy experiences a decline in economic
growth for more than two consecutive quarters. A recession is however not desirable for any
economy as during this period of time, unemployment will continue to rise as aggregate demand
within the economy continues to fall leading to a fall in real national output, the total amount of
goods and services produced within an economy over a period of time. A recession will as a result of
the falling levels of aggregate demand within the economy lead to deflation within the economy, it is
worth acknowledging that this means a fall in the average prices of goods and services within the
