The economic climate on business (AQA GCSE Business): Flashcards
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Economic climate
Economic climate
Overall economic conditions affecting how businesses operate
Direct effect of high interest rates on business loans
Direct effect of high interest rates on business loans
Business loans become more expensive
Effect on existing loans/overdrafts when rates rise
Effect on existing loans/overdrafts when rates rise
Costs may increase depending on borrowing terms
Why consumers spend less when interest rates rise
Why consumers spend less when interest rates rise
More expensive to borrow & better returns on savings
Consumer debt payments when interest rates rise
Consumer debt payments when interest rates rise
Monthly payments increase, less disposable income
Businesses most affected by rising interest rates
Businesses most affected by rising interest rates
Non-essential goods/services (entertainment, luxury, dining)
High employment - effect on incomes & spending
High employment - effect on incomes & spending
Incomes higher, spending increases on non-essentials
High employment - effect on worker motivation
High employment - effect on worker motivation
More motivated due to job security, higher productivity
High employment - recruitment challenge
High employment - recruitment challenge
Fewer workers available, vacancies difficult to fill
High employment - effect on wages
High employment - effect on wages
Wages increase as workers can demand higher pay
High employment - staff turnover effect
High employment - staff turnover effect
Increases as workers can easily move jobs
High unemployment - effect on consumer spending
High unemployment - effect on consumer spending
Decreases as fewer people have regular incomes
Increased consumer spending - business challenge
Increased consumer spending - business challenge
Must increase production or lose customers to competitors
Decreased consumer spending - effect on businesses
Decreased consumer spending - effect on businesses
Lower sales, decreased revenue, reduced profits
Consumer spending on luxury vs necessity goods
Consumer spending on luxury vs necessity goods
Luxury varies with income; necessity items remain stable