The manual.pdf, from the game’s folder, says:
Whenever you start a new city, you have the choice of three
difficulty levels, easy, medium and hard. The differences
between the levels are:
The amount of money you start with. In an easy game, you
start with $20,000. A medium game gives you $10,000. In a hard
game, you start $10,000 in debt, with a bond issue to pay back
when you can and interest to pay every year.
The national financial model. Your city is located somewhere
in SimNation. The growth of your city depends on its surround-
ings—rich, financially healthy neighbors are good customers
for your industrial products and, bring their money with them
when they visit your tourist attractions. In easy games,
SimNation is in a boom cycle. In medium games, the national
economy is stable. For hard games, SimNation is in a recession.
The external industrial product demand. The easier the
game, the more demand for the products that your city’s
industries can produce.
The propensity for disaster. The harder the game, the more likely
is it that your city will be host to a disaster. Choosing No Disasters
in the Disasters menu prevents disasters at all difficulty levels.