the economic climate of a business 2.3

describe the economy

economy made up of millions of individuals consumers many thousands of businesses and governments

consumers

individuals who use good and services produced by a businesses

economic climate

describes key set of key factors within country such as the level of goods and services produced

interest rates

refer to the costs of borrowing money or the reward for saving money expressed as a percentage

loan

amount of money provided to a business for a stated purpose in return for regular repayments includign interest charges

overdraft

allows individuals or businesses to withdraw more money than is currently available in their bank account, up to a pre-set limit. It is a form of short-term borrowing.

level of employment

percentage of woring age population who have a job

rising interest rates effects

businesses may suffer falling sales as consumer spend more

falling interest rates effects

businesses may see increased sales as consumers are encouraged to spend more.

consumer spending

the total amount of money spent by households on goods and services. It is a critical component of economic activity and can influence overall economic growth.

income elastic products

are goods whose demand changes significantly with a change in consumer income, often luxury items that see increased sales as income rises.

examples of elastic income products

include luxury cars, designer clothing, and high-end electronics, as their demand rises with increased consumer income.

examples of products that arent income elastic

include basic necessities like food, toiletries, and fuel, where demand remains relatively stable regardless of income changes.