discuss….. Thought for the day:

External costs and benefits Appreciate the concepts of social costs and benefits Understand the difference between a social cost and social benefit and a financial cost and a financial benefit Show an understanding of how business activity can create them Use 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 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 Business cycle 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

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

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

Recovery: Stock levels begin to fall Output increases Employment rises.

Boom: Full capacity in the economy Prices increase Investment increases Business working flat out Shortage of skilled labour (wages rise).

External costs and benefits Appreciate the concepts of social costs and benefits Understand the difference between a social cost and social benefit and a financial cost and a financial benefit Show an understanding of how business activity can create them Use 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?

Plenary Level 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?