Business Studies Multiple Choice Question – 5 August 2017

Chart 1

Identify TWO MOST LIKELY effects on small businesses of the changes in interest rates shown in the graph above?

Select TWO answers.

  1. Increased consumer spending using credit cards
  2. Lower costs for businesses who have an overdraft
  3. Less consumer spending with small businesses
  4. Higher variable costs for small businesses with variable rate overdrafts.
  5. Higher fixed costs for small businesses with fixed bank loans

Why do savings theoretically fall when interest rates come down. Which types of savers are most impacted by falls in interest rates?
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This is multiple choice question is suitable for Business Studies KS4 classes.

The answer is 3 & 4 – Sales are likely to fall as consumers reduce their spending as interest rates rise, and those with large debts or mortgages have less disposable income to spend, and higher variable costs from those on variable interest rate overdraft arrangements.

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