Economy and Business: Business: Pearson (Edexcel): GCSE (9:1)

The economy

The combination of consumers, businesses, governments and organizations that produce, use, buy and sell all the products and services in a given area, region or country

Economic climate

Key factors including levels of employment, production, income and spending

Interest rate

A percentage representing the cost of borrowing

Improving economic climate

Levels of employment, production, income and spending decreasing

Weakening economic climate

Levels of employment, production, income and spending increasing

High interest rates

Good for savers, bad for borrowers

Low interest rates

Good for borrowers, bad for savers

Loan

A sum of money borrowed over a fixed term, at a fixed interest rate from a bank

Overdraft

A negative balance on a bank account, on which interest is usually charged

Consumer confidence

How positive the general public is about the economy reflected in increased spending

Consumer spending

The value of goods and services bought over a given time period

Income elastic products

Sales of these non-essential products fall when consumer incomes decrease

Income inelastic products

Sales of these essential products remain stable when consumer incomes decrease, or sales in dicount brands sometimes increase

Savings

Money deposited in banks which usually earn interest

Borrowing

Loans, mortgages, overdrafts and credit