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AQA GCSE (9-1) BUSINESS (8132)

3.2.3 The economic climate on business

The economic climate – define that here:

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Interest rates – define that here:

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• Interest rates are set by the bank of __________________________________ and

will affect; ___________________________, loans, overdrafts and credit cards

• Businesses will be affected because they may also need to

______________________ money to keep going, to expand and to

______________________ their business

Revisionstation worksheet ©


Explain what is happening in this graph

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Interest rates:This is the cost of _______________________ money.

• If the bank of England pushes ___________ interest rates consumer and

business spending will ___________________.

Complete the diagram -Changes to interest rates – effect on business



Changes to interest rates – effect on business

• If interest rates rise then the cost of borrowing will rise and this will mean

that the costs for a business may increase, this could lead to a fall in

profits



• A fall in interest rates means that the cost of paying loans will fall, which

may lead to an increase in profits

Interest rates – impact on consumer spending

• If consumers can borrow they can buy; clothes, cars, washing machines,

houses, caravans, holidays, and just about everything else

• If the cost of borrowing goes up then consumers decide to save instead of

spend

Definition of unemployment – write that here

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Key terms

Disposable income

Discretionary income

Unemployment- tick the correct statements

If unemployment rises people have no jobs



If unemployment rises people have more jobs

This means that they have low incomes

This means they have high incomes

This also means that they have little disposable income

This means they have plenty of disposable income

Lower disposable income means less spending on goods in the shops



Complete the diagram - Who are the unemployed and how did they become “unemployed”?

Complete the diagram - Consequences of unemployment for business



Complete the table – Jobseekers allowance

Age JSA weekly amount



How unemployment affects business

• It encourages ______________________________________

• Many unemployed people start their own _____________________________

instead of looking for jobs, they become

__________________________________________________________

• Sites like ________________________________ and Ebid have helped many

people to set up their own ___________________________________ business

How unemployment affects business

• Lower _____________________________ costs – as there are more people out

of work looking for work, a business can pick and choose the candidates, it

can also lower the _____________________________ rates

• This is called downward ______________________________________ on wages

Consumer spending – 3 types of goods, complete the table



• Changing levels of consumer incomes and the impact on goods demanded

• As consumer incomes rise, this means there is a general increase in the demand for goods and services

• For example, with more disposable income consumers will be able to; go to the cinema, go bowling, eat in a restaurant and so on

• So the demand for these goods and services has increased

Complete the diagram – changing levels of consumer income


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