Economic Variables (Demand Factor)
Macro-economic factors affecting demand: GDP growth, unemployment, inflation, interest rates, exchange rates.
Real World
When UK interest rates rose sharply in 2023, mortgage repayments increased and consumers had less disposable income, causing Persimmon's new home sales to fall significantly.
Exam Focus
Name the specific economic variable and explain the transmission mechanism (e.g. higher interest rates → costlier borrowing → lower consumer spending) for full marks.
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