discuss…..

Thought for the day:

 External costs and benefits Appreciate the concepts of social costs and benefitsUnderstand the difference between a social cost  and social benefit and a financial cost  and a financial benefitShow  an understanding of how business activity can create themUse examples to show how business decisions create social costs and benefits Apply such concepts to a given business decision Evaluate  the possible consequences to stakeholders of a given business decision  Exchange rates Understand how importing/exporting decisions might be affected by changes in exchange ratesUnderstand the concept of a rate of exchange of a currencyUnderstand what  is meant by an appreciation and depreciation of a currencyShow  awareness of the importance of exchange rate changes to importing  and exporting businesses  Business cycle The main phases of the cycle Describe the main stages of a business cycle Impact  of boom/recession on businessUnderstand the impact  of the stages on a business in terms of sales, profits and business costs

How to get an A

Knowledge & Understanding

Anayslis

Evaluation

A

Grade

Application facts, terms, concepts and conventions appropriate to the syllabus; theories and techniques

Apply facts, terms, concepts, theories and techniques to business problems and issues. Link to a business.

Examine, Analyse, Interpret, Formulate, Cause and Affect, advantages & disadvantages.

Evaluate, discuss, justify, advise, recommend. reasoned explanations,

develop arguments, understand implications and draw inferences

A04

A03

A02

A01

Exchange rates

Understand how importing/exporting decisions might be affected by changes in exchange rates

Understand the concept of a rate of exchange of a currency

Understand what  is meant by an appreciation and depreciation of a currency

Show  awareness of the importance of exchange rate changes to importing  and exporting businesses

• The exchange rate measures the value of one currency in terms of foreign currencies.

• Appreciation of currency means higher exchange rates, means that export prices will be high therefore the exporter will have less price competiveness.

• Depreciation of the currency means lower exchange rate means the domestic firms that import raw materials and components will suffer from having to pay relatively higher prices.

• Large unpredictable changes in the exchange rate can make business planning difficult because a business cannot predict its export earnings or costs of imported materials.

Exchange Rates

Australia dollar strong• AUSD$1 = SING$2

• So if Australia wants to sell for AUD$20 (to make $10 profit) will have to sell for…

• SING$40• If AUD keeps getting more 

expensive then will have to increase selling price (to maintain profit margin)

Australian dollar weak• AUSD$2 = SING$1• So if Australia wants to sell 

for AUD$20 (to make $10 profit) will have to sell for…

• SING$10• If AUD keeps getting 

weaker.. Can be cheaper..

Business cycle

To learn:The main phases of the cycle Describe the main stages of a business cycle Impact  of boom/recession on business

Understand the impact  of the stages on a business in terms of sales, profits and business costs

The Business (Economic) Cycle

The Business Cycle

• Typical business cycle– Peak– Recession– Trough– Recovery

Time

Re

al G

DP

Figure 2Typical Business Cycle

Peak

Recessionor

Downturn Trough

Recovery

Peak

Contraction Expansion

Trend

Downturn:

• Demand falls• Output falls• Employment falls• Falling in investment• Many business making losses• Some business close down.

Time

Re

al G

DP

Figure 2Typical Business Cycle

Peak

Recessionor

Downturn Trough

Recovery

Peak

Contraction Expansion

Trend

Recovery:

• Stock levels begin to fall• Output increases• Employment rises.

Time

Re

al G

DP

Figure 2Typical Business Cycle

Peak

Recessionor

Downturn Trough

Recovery

Peak

Contraction Expansion

Trend

Boom:

• Full capacity in the economy• Prices increase• Investment increases• Business working flat out• Shortage of skilled labour 

(wages rise).

TimeR

ea

l GD

P

Figure 2Typical Business Cycle

Peak

Recessionor

Downturn Trough

Recovery

Peak

Contraction Expansion

Trend

External costs and benefitsAppreciate the concepts of social costs and benefitsUnderstand the difference between a social cost  and social benefit and a financial cost  and a financial benefitShow  an understanding of how business activity can create themUse examples to show how business decisions create social costs and benefits Apply such concepts to a given business decision Evaluate  the possible consequences to stakeholders of a given business decision

p

• Pg 240

1. What did I learn this lesson that I didn’t know before?

PlenaryLevel achieved_____

What do you now know as a result of today’s lesson?

What are your areas for improvement? What are you going to do about this?