2.3 When the interest rate goes higher, it will be more expensive to borrow money but you will get much more interest when you put money into the bank.
2.4 For me it is better for Safeway to save money by spending less and not spending over the budget, as the interest rate will hit them financially pain fully. The government is very clever because he give the control of interest rate to an unelected central bank, which I may think it is the Bank of England in an attempt to avoid the blame.
2.5 High interest rate are bad for exporters. Higher interest rate in the UK results in savers from abroad putting their money in UK banks. To this they will need to buy pounds, and this make pounds more expensive. This will be good for farmers across the world that export groceries product from the Asia and South America continents, country that are normally hot because it will be cheaper for Safeway to buy from others continents or to buy imports. It wont be good for Safeway if theys is low interest rate as they will suffer.
Exchange Rate
3.1 An exchange rate is simply the price at which one currency can be traded for another currency. A reason why Safeway may want to buy another currency could be that they want to invest in to USA bank because they interest rate may be high or if they very clever that the value of the dollars will increase in the future and they want to make money by buying a lot of dollars whilst it’s still cheap and sell it when its is expensive.
3.2 A strong pound is bad for exporters and good for importers. An example for this could be, if the exchange rate is £1 = $2 then a British bat that cost £5 will have to sell in the USA for $10 and a baseball bat that cost $6, will cost £3 in the UK. So to sell and American product in the UK will be cheap.
3.3 A weak pound is good for exporters and bad for importers. This is the reverse of everything I had said about if they were strong pond.
Inflation
4.1 The unemployed suffer most from unemployment, Safeway does suffer the most from inflation. If a business do well like Tesco, Asda then they will be more people employed. The government believes that the best way to solve unemployment is to try to have low inflation rate for companies like Safeway.
4.2 Inflation does make it difficult for Safeway because they have to constantly changing they prices this mean reprinting the cost and explaining to the customer why the prices have gone up.
4.3 In the 1980’s the inflation was at it highest ever over 15% the highest it’s been over the past 24 years. Today the inflation rate is about 2.5% and it’s very difficult for the government to decrease the inflation rate.