Chapter 1 Year 11 Cont

• What are the main topics covered in Economics chapter 1?

  Interest rates, saving, borrowing, spending, and investment
• What is savings in the context of economics?

  Money placed in an official scheme such as a bank
• How are savings accounts typically rewarded?


  Savings accounts are often rewarded with interest
• What does spending refer to in economics?


  Consumption where individuals attain goods and services to satisfy wants
• What is disposable income?

  Money left after tax is deducted from earnings
• What factors influence how people spend their disposable income?

  Habits, taxation levels, confidence, and wealth
• What is the impact of rising interest rates on consumers and producers?

  • Consumers:
  • Encouraged to save more due to increased rewards
  • Less likely to take out loans due to higher costs
  • Decreased consumer spending

  
  

  • Producers:
  • More likely to save more as rewards increase
  • Less likely to invest due to higher borrowing costs
• What is the impact of falling interest rates on consumers and producers?


  • Consumers:
  • Less likely to save as rewards decrease
  • More likely to take out loans due to lower costs
  • Increased consumer spending

  
  

  • Producers:
  • Likely to save less due to decreased rewards
  • More likely to invest as borrowing costs decrease
• Investment

  Spending on capital goods etc. machinery and vehicles.