Unit 2- Influences on a Business

Question 1

What is interest rates?

Answer 1

The cost of borrowing money or the reward for saving money, expressed as a percentage.

Question 2

How does change in interest rates affect consumers? both ways.

Answer 2

+ saving more, as the ‘extra’ payment on savings is increased.
+ spending less, as borrowing to buy major items will be more expensive.

Question 3

How does a change in interest rates affect the business?

Answer 3

+ a rise may result in business that have borrowed heavily, to pay greater sums of interest. This may reduce profits, or threaten business survival.
+ Business which sells items that are bought by consumer’s using loans, may suffer a fall in sales,when interest rates rise.

+ a fall, as cost of borrowing increases, money is cheaper, business spending may increase, and those who buy products using loans, will increase sales.

Question 4

what are the impacts of legislation?

Answer 4

costs
marketing and sales
production
human resources act