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Economic Factors - Coggle Diagram
Economic Factors
Trade-defficit
- Involves tarrifs and quotas
- It is when imports are more than exports
- Why should businesses be concerned? It discourages local sales, eg if Imports are cheaper
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Inflation
- Increases cost of production
- Reduces purchasing power of cunsumers
- Leads to higher interest rates (discourages both consumer and bank)
Exchange rate
- Paradigm of converting a unit of currency to another, based on perceived value.
- Impacts businesses involved in international trade, eg Businesses from China
Budget-Defficit
- Upon occurrence, government tries to increase taxes to businessess/consumers
- Thus borrowing internally or externally (out country) to bridge the gap
- Ultimately, affecting the business directly or indirectly when borrowed internally or externally (LOOK INTO THIS)
Unemployment rate
- When more people are unemployed, no money is being spent on producer products, thus less business profits
Interest Rates
- Impacts the saving rates and borrowing rates (both of producer and consumer)
- High borrowing rates discourages consumers, thus no money to spend hence affecting businesses indirectly
- Businesses not being able to borrow due to high bank borrowing rates leads to no rent thus no growth...Affecting business directly
- Business borrow money to buy raw materials, re invest and pay salaries or hire new workers
Trade-Surplus
- When Exports are greater than Imports
- Implies business is doing well, thus a good thing
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