Interpreting Macroeconomic Conditions

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The supply and demand of the automotive and gaming industry as well as the profits derived from the sector are clearly impacted by macroeconomic conditions. The purpose of this paper is to identify key macroeconomic variables that affect the automotive and casino Industry. The measure of interest rates, the CPI, and wage rates are some of the most compelling macroeconomic variables that can be used to assess the state of the automotive and gaming industry. Interest rates Interest rates are an important determinant of the performance of an industry. For consumers, interest rates represent the available funds they are willing to borrow to satisfy today’s needs. For businesses they represent the cost of borrowing money to invest in the growth of a company. Interest rates affect the economy. As the Fed raises or lowers short-term interest rates, banks may raise or lower the interest rates they charge borrowers, including the prime rate (Northrop Grumman, 2009). Changes in the prime rate may affect the whole economy. For example, an increase may result in fewer consumers taking auto loans, which in turn may cause a slowdown in the automobile industry. Also, when interest rates go up it could possibly affect the casino and gambling industry too. Interest rates affect the way people spend their money. When interest rates rise, the casino industry may go down because people will not be able to spend money for leisure activities. With high interest rates, consumers have less money to spend and less motivation to borrow (Northrop Grumman, 2009). On the other hand, when interest rates decline, businesses find it easier to finance expansion and people find it easier to spend money on leisure activities and nice automobiles. High interest rates depreciate the value of a dollar, giving consumers less purchasing power. This means consumers have to pay more for a car when
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