What Are The Two Economic Factors That Affect Financial Decisions How Might These Factors Influence Your Financial Planning? - Fixanswer

“Some economic indicators like inflation and exchange rate impact an individual’s finances directly while others like GDP growth rate give an idea of where the economy is headed. Therefore, it is important to keep a close eye on the developments in this space. Also, all these events cannot be seen in isolation.

What are the two economic factors?

Tax Rate.
Exchange Rate.
Inflation.
Labor.
Demand/ Supply.
Wages.
Law and policies.
Governmental Activity.

What factors affect financial decision making?

Internal factors affecting financial decisions include nature of the business, the size of business, expected return, the cost and risk involved , the asset structure of the business, the structure of ownership, the expectations of investors, the age of the firm, the liquidity in company funds and its working capital ...

What are two factors that will influence your planning for financial goals?

Spending behavior. Your financial life is linked directly to your spending. ...
Financial potential. ...
Savings and investments. ...
Provision for emergencies. ...
A financial planner or advisor. ...
Responsibilities. ...
Financial goals. ...
Your age.

What are the five economic factors?

Supply and demand.
Interest rates.
Inflation.
Unemployment.
Foreign Exchange rates.

What are the three economic factors?

Though the number and variety of the different resources businesses require is limitless, economists divide the factors of production into three basic categories: land, labor, and capital .

What are three economic influences that affect your day to day financial decisions?

Current economic conditions also affect your personal financial decisions. The three important economic conditions are: Consumer prices . Consumer spending .

How have changes in the economy affect financial planning activities?

Financial planning must include planning for the risk that economic factors will affect financial realities. A recession may increase unemployment, lowering the return on labor —wages—or making it harder to anticipate an increase in income. Wage income could be lost altogether.

What are the opportunity cost associated with financial decisions?

Opportunity Cost Definition

Opportunity cost is the value of what you lose when you choose from two or more alternatives . It’s a core concept for both investing and life in general. When you invest, opportunity cost can be defined as the amount of money you might not earn by purchasing one asset instead of another.

What are the 5 factors that influence financial decision making according to attached article?

YOUR PERSONALITY & EMOTIONS. ...
PAST EXPERIENCES & EXAMPLE. ...
YOUR PHYSICAL & MENTAL HEALTH. ...
THE CULTURE & SOCIETY WHERE YOU LIVE. ...
YOUR FINANCIAL KNOWLEDGE.

What strongly influences financial thinking?

Personal circumstances that influence financial thinking include family structure, health, career choice, and age . Family structure and health affect income needs and risk tolerance. ... Age and stage of life affect sources of income, asset accumulation, spending needs, and risk tolerance.

What are the principles of financial decision making?

Organize Your Finances. ...
Spend Less Than You Earn. ...
Put Your Money to Work. ...
Limit Debt to Income-Producing Assets. ...
Continuously Educate Yourself. ...
Understand Risk. ...
Diversification Is Not Just for Investments. ...
Maximize Your Employment Benefits.

What are three strategies that you can use to make better financial decisions?

Create a Spending Plan & Budget. ...
Pay Off Debt and Stay Out of Debt. ...
Prepare for the Future – Set Savings Goals. ...
Start Saving Early – But It’s Never Too Late to Start. ...
Do Your Homework Before Making Major Financial Decisions or Purchases.

What personal and economic factors affect financial decisions?

Personal factors that affect personal financial decisions include age, marital status, number and age of household members , and employment situation. Economic factors include the global economy, inflation, and interest rates.