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UNIT 11 NEW BUSINESS A stable economy is beneficial because businesspeople are able to plan better when there is less uncertainty about future inflation, taxes, etc. A strong currency in manufacturing means that imported raw materials are cheaper but your exports will be more expensive than those from some competing countries. However, if products offer more benefits, they may justify a higher price. Cheap rents for office and factory space are more attractive than expensive ones, but having your office in the right place at a higher rent may be more attractive than having it in the wrong place at the lower rent. Good transport links are important for employees to get to work, for salespeople to get to customers as well as for the distribution of goods. Government grants may be used to try to persuade companies to set up in areas with high unemployment but, if the area is unsuitable for other reasons (unskilled staff, distance from markets, …) these grants will not be enough. High unemployment may mean that the wages an entrepreneur has to pay may be lower but it may also happen that he is not able to find the people with the required skills. UNIT 11 NEW BUSINESS UNIT 11 NEW BUSINESS Low interest rates mean that it is cheap to borrow money to develop new business activities. Low taxes are a characteristic of flexible labour market where there are low taxes on companies but also low social costs (low payments from companies and employees for benefits such as health care and unemployment benefit), where it is easy to fire people when activity decreases, and where people quickly find jobs when activity increases again. Skilled staff partly results from a good national education system and good training of employees. Training courses provided or funded by the government may be helpful in developing the skills of new entrepreneurs. UNIT 11 NEW BUSINESS UNIT 11 NEW BUSINESS Vocabulary, Economic terms, page 99 balance of trade trgovačka bilanca the difference in value between imports and exports of goods over a particular period: If we sell more than we buy, we have a favourable balance of trade. a balance-oftrade deficit (= when a country spends more on imports than it earns from exports) exchange rate devizni tečaj the relation in value between one currency and another: The current exchange rate is 50 rupees to the euro. the rupee/euro exchange rate The euro has a high exchange rate against the yen. movements/fluctuations in the exchange rate We need a competitive exchange rate (= attractive to buy) to get the economy growing. The peso was pegged to the US dollar at a one-to-one exchange rate. SYN CURRENCY RATE a high/low/stable/strong/weak exchange rate a competitive/favourable exchange rate the exchange rate drops/falls/rises an exchange rate regime/system foreign investment inozemno ulaganje GDP (gross domestic product) bruto domaći proizvod (BDP) the total value of all the goods and services produced by a country in one year: Tourism contributes about 5% of GDP. GDP grew by 0.5 per cent in the fourth quarter. government bureaucracy državna birokracija inflation rate stopa inflacije interest rate kamatna stopa labour force radna snaga tax incentives porezni poticaj (stimulans) a reduction in tax that encourages companies or people to do sth: The regional government is offering tax incentives to companies who move to the region. unemployment rate stopa nezaposlenosti UNIT 11 NEW BUSINESS UNIT 11 NEW BUSINESS Vocabulary from exercise A, p. 98 grant an amount of money that is given by the government or by another organization to be used for a particular purpose: The study was supported by a $70 000 grant from a research group. They were awarded grants to develop new methods of crop production. currency (plural currencies) the system of money that a country uses; the value of the country’s money: Brazil’s currency, the real trading in foreign currencies I had to change my euros into local currency. A weaker currency would help our exports. The government has devalued the national currency by 29%. The dollar rose against European currencies but fell against the Japanese yen. The new currency will be pegged to the US dollar (= the value of the new currency will be linked to the value of the dollar). common/domestic/foreign/local/national currency a stable/strong/volatile/weak currency to buy/change/exchange/sell currency to devalue/depreciate/peg/prop up a currency currency devaluation/fluctuation/movement a currency dealer/speculator/trader stable firmly fixed; not likely to move, change or fail: Imports have dropped but exports have remained stable. They promised better service and stable prices for the basic phone service. The economy is becoming more stable. UNIT 11 NEW BUSINESS