The economic climate

• What does the economic climate refer to?

  The state of the economy
• What happens in a growing economy?

  • Demand increases
  • Sales increase
  • Prices increase
  • Confidence increases
  • Easier to borrow
  • Wages increase
  • Investment increases
• What are the effects of a shrinking economy?

  • Demand falls
  • Sales decrease
  • Prices decrease
  • Confidence decreases
  • Harder to borrow
  • Wages decrease
  • Investment decreases
• What is unemployment?

  The number of people looking for a job
• What is the impact of low unemployment?

  • Harder to recruit
  • Need to offer higher pay
• What is the impact of high unemployment during a recession?

  • Consumer incomes are lower
  • Sales fall
  • Easier to recruit
• What is consumer income?

  Average income for the country
• What is the impact of low levels of consumer income in a recession?

  • Decrease in demand
  • Sales decrease
  • Inferior goods benefit
• What is the impact of high levels of consumer income during a boom?

  • High demand
  • Especially for luxuries
• What is the impact of low inflation on consumers?

  Stability
• What is one type of tax mentioned?

  Income tax
• How does high inflation affect customers' purchasing power?

  Customers can't afford to buy as much
• What do workers demand during high inflation?

  Higher wages
• What is the effect of high interest rates on borrowing?

  Cost of borrowing increases
• What is the impact of low interest rates on businesses?

  Businesses are more likely to borrow
• What happens to costs when taxes are low?

  Costs are lower for businesses
• How do high interest rates affect consumer behavior?

  Customers borrow less
• What is the overall effect of high taxes on businesses?

  Higher costs for businesses
• What is one type of indirect tax mentioned?

  Value added tax
• What is the impact of high inflation on material costs?

  Raw material costs increase
• What happens to overall demand when income decreases?

  Overall demand falls
• What is the effect of low taxes on business operations?

  Businesses can save more
• How do high taxes affect consumer income?

  Lower income for consumers
• What is the relationship between interest rates and saving?

  Higher interest rates reward saving
• What is the impact of low inflation on government revenue?

  Stable government revenue
• What is one type of tax that affects businesses directly?

  Corporation tax
• How does high inflation impact business rates?

  Business rates increase
• What is the effect of low interest rates on consumer spending?

  Encourages more consumer spending
• How do high taxes influence business revenue?

  Lower revenue for businesses
• What is the impact of high inflation on loan repayments?

  Loan repayments increase
• What is the effect of low inflation on consumer confidence?

  Increases consumer confidence
• How does inflation affect the average price level?

  Inflation causes the average price level to rise
• What is the relationship between interest rates and borrowing costs?

  Higher interest rates increase borrowing costs
• What is the impact of high inflation on consumer purchasing behavior?

  Consumers buy less due to higher prices
• How does low inflation affect business investment?

  Encourages business investment
• What is the effect of high taxes on consumer spending?

  Reduces consumer spending
• How does inflation impact the cost of living?

  Increases the cost of living
• What is the effect of low taxes on consumer prices?

  Can lower consumer prices
• How does high inflation affect savings?

  Reduces the value of savings
• What is the impact of low interest rates on the economy?

  Stimulates economic growth