Determine the impact of

Determine the impact of economics on business.


The impact of economics on business can be significant.  There are several factors that drive the economics of any business.  Spending appears to be the primary driver.  If people can’t spend or consume goods or services, it begins to have a ripple effect throughout the economy.


There are many factors that impact why someone does not spend as much; loss of income, increase of expense or fear of both.  When one or more of these factors take place businesses are impacted and then begin to cut back as well.  (Capoloa, 2011) states,  “Some surveys have shown that owners are less willing than in previous years to expand their small businesses, to hire addi­tional workers, to invest in new plant and equipment, or to borrow money”(p15).  The bottom line as he states, “Consumption accounts for 70 percent of overall output. Less spending has real effects in the overall economy.”  When people stop spending and businesses stop expanding it has a rippling effect on the micro and macro economy.


Another factor that impacts a business is inflation or costs increasing.  As inflation starts to take hold and costs begin to raise it affects both the consumer and the business owner.  Electricity, heating, gas, healthcare are fixed costs that people and businesses need but have very little direct control over.  If these fixed costs raise it affects the ability for the consumer to spend or the business to hold prices.








Capola, J. (2011, Jan). Economic Impacts to Business, Inc Magazine, (Jan), 15-37

Leave a Reply