Economic external influences
| English | Chinese | Pinyin |
|---|---|---|
| recession | 衰退 | shuāi tuì |
| exchange rate | 汇率 | huì lǜ |
| business cycle | 经济周期 | jīng jì zhōu qī |
| boom | 繁荣 | fán róng |
| recovery | 复苏 | fù sū |
| interest rates | 利率 | lì lǜ |
| currency | 货币 | huò bì |
| exports | 出口 | chū kǒu |
| imports | 进口 | jìn kǒu |
| inflation | 通货膨胀 | tōng huò péng zhàng |
The weather a business can't control
- A firm can run itself perfectly and still be hit by a recession 衰退, a rate rise, or a swing in the exchange rate 汇率.
- These external economic influences shape every business, yet lie outside its control.
External influences lab
Classify outside changes by the channel that hits the business.
During a recession, most businesses experience:
A recession cuts demand and sales for most firms.
The phase of the business cycle with falling output and rising unemployment is a ______.
A recession is the downturn phase.
The business cycle 经济周期
- Economies move through boom 繁荣 → slowdown → recession → recovery 复苏.
- In a boom, demand and profits rise; in a recession, sales fall and firms may cut jobs.
Demand for most firms rises in a boom and falls in a recession.
A rise in interest rates is likely to:
Dearer borrowing cuts spending and demand.
A stronger domestic currency makes a firm's exports:
A strong currency raises the foreign price of exports.
Interest rates 利率 and exchange rates
- Higher interest rates raise borrowing costs and cut consumer spending → lower demand.
- A stronger currency 货币 makes exports 出口 dearer abroad and imports 进口 cheaper at home.
A strong currency makes exports dearer and imports cheaper; a weak one does the reverse
A multinational's outlets look the same worldwide: a global brand
Inflation tends to raise a firm's costs and reduce customers' real spending power.
Both effects squeeze the business.
Inflation 通货膨胀
- Inflation raises a firm's costs (materials, wages) and erodes customers' real spending power.
- Firms respond by raising prices, cutting costs, or improving efficiency.
External shocks hit different firms differently. A recession devastates a luxury-goods maker but barely touches a discount retailer — which may even grow. Always link the influence to the specific business.
Inflation is a sustained rise in prices over time
You've got it
- the business cycle: boom → slowdown → recession → recovery
- higher interest rates cut demand; a stronger currency hurts exporters
- inflation raises costs and erodes spending power — effects vary by firm