The Basics
The term for a person or business that borrows money
Borrower
A sudden, unexpected weather pattern that can damage property and crops.
A natural disaster
What is the flow-on effect of a downturn in the tourism industry?
Decrease in tourist arrivals to an area may cause a drop in business for local restaurants, cafes etc. This could lead to staff having their hours reduced.
A negative financial effect on a household that happens after a family member loses their job.
Decrease in spending, unable to pay bills.
A strategy a household might use to mange a sudden loss of income.
Cutting back on wants, spending and or using savings.
Lender
This is a general slowdown in economic activity, often leading to job losses.
A recession
What is the flow-on effect of a large-scale business closure?
Job losses, reduced household spending
The effect on a small business's sales after a local factory shuts down.
A decrease in sales and revenue
What a small business might do to financially survive a significant drop in customer spending.
Offer discounts, seek a loan, reduce costs.
Interest
The term for a significant increase in the price of a good or service.
Inflation
What is the flow-on effect of a rise in fuel prices?
Freight companies pass this cost onto consumers. Those that use cars for household use may need to make cuts in other spending areas to be able to pay for petrol or look for alternative means of transport.
The likely effect on a country's exports if a key trading partner experiences a major recession.
A decrease in demand for N.Z exports
A bank's response to an increase in home loan payment defaults.
Increasing the interest rates, tightening their lending criteria
The original amount of a loan before interest is added.
Principal
This type of event could be a change in law, like a new tax on a specific product.
A change in government policy
What is the flow-on effects of a delay in a large infrastructure project?
Can impact the incomes of builders, electricians, plumbers as well as the suppliers of the building materials.
The effect on N.Z households of a significant increase in fuel prices.
What a farmer might do to financially prepare for a future drought.
Save money in a special account or purchase drought insurance
A person, business, or country is said to have this if they have more money going out than coming in.
A deficit
An event that sees a major company close down leading to job losses.
Business closure or downsizing
What is the flow-on effect of a government subsidy for a specific industry?
Could lead to an increase in employment opportunties for that company and related companies.
A major effect on a bank's lending practices if many of their customers suddenly stop paying back their loans.
May be less willing to lend in the future, may increase the interest rates on future loans
A government's financial response to a major natural disaster that causes widespread damage.
Offering grants, low-interest rate loans, offering other types of financial assistance