Economic Factor

Does anybody know how it works? Does it affect transfer fees?

If you want to know if the game simulates economical crisis, then the answer is no.

Bit of a silly question, almost as iffy to ask "What happens if a World War breaks out?" or "Do all players catch swine flu?"

It's not silly, you can set it in the editor, but you are best off asking in the editors forum.

It does affect teams as some teams dont get a budget in the first season and more teams lose a lot of money and end up bankrupt

There are no outside influences on Football Manager.

There is no simulated "economic crisis" or any sort of financial meltdown, crisis, recession, boom, bust or anything else of that nature. Taxes don't increase, Transfer Fees are not inflated, Ticket Prices do not fall or rise except with club reputation.

Football Manager exists in a perfect financial world providing you do the basics right and balance income and expenditure.

Anything to the contrary would appear to be lies

I think he means the option in the editor called Economic Factor, found at the top of the information page of Nations.

He is asking what that does in the game?

Oops

With regards to the Economic Factor, i would summise that it affects the Financial model in each League; TV Money, Sponsorship, Ticket Prices and perhaps attendances, Investment etc and the brackets that they roam within. England has the highest rating at 19, which seems accurate enough given the money in the Premier League.