Essay on Unit 1 - P5

932 Words May 25th, 2015 4 Pages
Business confidence and stability Stability exists when businesses can make forecasts for the short and long term about likely demand for their products in the near future. Stability involves being able to make deals secure in the knowledge that the people you supply on credit will be able to pay you back the price agreed. An example of this would be a bank loan. Businesses like to have stable economic condition, this gives them and the customer’s confidence to go out and spend money. In other words, the demands for luxury items are still high. This is because when customers know that they could afford to buy something without worrying about losing their job they tend go out and purchase more products and therefore increase overall …show more content…
This had a major effect on unemployment. At the time individuals who even had graduate degrees were unable to get jobs with their qualifications, this resulted them in going to work for any jobs, even if it was at the local Starbucks or McDonalds. Low levels of unemployment lead to people not buying things and that is another factor that leads to the demand being lowered. This being said, business cycles often goes in circles, for example, in some years the business cycle can be in a recession and others it will boom. A boom is a period of time during which sales of a product or business activity increases very rapidly. This in turn benefits both the businesses and the employees within the business, thus unemployment also goes down. Demand in business is used to describe the quantity of a good or service that customers will buy at a particular price. This can be affected by many things. Also, the overall demand for products and services can be caused by recessions, booms; this is because stable economic conditions result in businesses benefiting because they end up make more profit. An increase in profit means that businesses no longer have a need to decrease the number of employees to cut costs. This reassures employees and creates a sense of job security which results in employees spending more money and that also in turn benefits businesses further. Inflation occurs when there is a general rise in the

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