The economic factors that determine the nature of opportunities or threats that organizations may face in the macro-environment include:

1. Economic Growth Rate:
   The growth rate of an economy is measured by Gross Domestic Product (GDP) and is a basic indicator of the general health of the economy. An increase in the GDP rate from year to year indicates expanding economic activities, with more money being spent in the economy. This presents an opportunity for organizations to expand their business and increase profits. Conversely, when economic growth declines, the goods and services produced in the economy decrease due to reduced spending by various units, including the government, private sector, and households. This situation is often referred to as a recession.
2. Inflation:
   Inflation refers to the general increase in the prices of goods and services. Some level of inflation is necessary to generate demand for goods and services. However, inflation becomes a threat when the rate becomes too high. In Ghana, for instance, the Bank of Ghana, which is responsible for price stability, has set the right inflation range at 8%±2% (i.e., 6%-10%). Inflation beyond 10% is considered a threat to businesses as it negatively affects purchasing power.
3. Interest Rate:
   Interest rates represent the cost paid for borrowed funds and are a component of the cost of doing business. When interest rates are high, the interest cost paid on debt capital increases, which can negatively impact companies with low profits since the interest cost is fixed.
4. Fiscal Policy:
   Fiscal policy refers to the government’s use of taxation and expenditure to regulate economic growth. Generally, when taxes are increased, and government expenditure is reduced simultaneously to balance the budget, businesses may experience reduced cash flow, and the demand for the organization’s goods and services may drop since the government is a significant buyer in the economy. Conversely, when taxes are reduced and government expenditure increases, it frees up cash flow and increases demand for goods and services, creating an opportunity for businesses.
5. Budget Deficit:
   A budget deficit occurs when government expenditure exceeds revenue and must be financed. Budget deficits are typically financed through borrowing from the capital market (both domestic and foreign) or from the central bank, where money is printed for the government. Borrowing from the domestic capital market can increase interest rates, crowding out the private sector, while central bank financing may fuel inflation since the increase in money supply is not backed by real productivity.

(Each factor well explained @ 2 marks each = 10 marks)