12: Global Economy

Different Areas of Global Economy

Economic Activity (including inflation)

Interest Rates

Discretionary Spending

Currency Fluctuations

Economic Activity

Refers to the GDP of a business, and how much people are spending

The current and forecasted economic activity of a market will impact business growth, profit, inflation and interest rates.

Success is more likely in countries with higher economic activity

Inflation (Economic Activity)

Inflation measures the increasing prices of a country’s products

This is typically due to easy credit, pushing demand over supply and is common in strong economic times where consumers are confident

The higher the inflation is, the more likely it is for interest rates to rise, which is less profitable for business expansion

Interest Rates

Indicate a market’s strength with high rates indicating higher repayments on debt for both businesses and consumers

It is a method used to control the expansion of the economy

Discretionary Spending

Discretionary Spending refers to the money spent by consumers on non-essential products like holidays, luxury items, etc

Discretionary spending is often impacted by culture

Currency Fluctuations

Fluctuations impact a business’s purchasing power and operating costs

The cost of importing, exporting and paying foreign employees is impacted by these fluctuations

Rise in AUD

• Goods exported are more expensive to foreigners

• Consumers will likely import

Fall in AUD

• Goods imported are more expensive

• People and businesses going to Australia will find it cheaper