Tag: GCSE

A UK business sells shoes in Europe. Each pair is sold for £40. The exchange rate between the pound and Euro decreases from £1 = 2 Euros to £1 = 1 Euro.

Which of the following is MOST LIKELY to best describe the change in price of the shoes?

Select ONE answer:

1. The shoes are now cheaper in Europe
2. The price of the shoes decreases by half the original amount
3. The shoes become more expensive
4. The shoes still sell for £40 in the UK
5. There is no change to the price in Europe

When exchanging from a foreign currency to pounds the rule is……?
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Business Studies KS4 classes.

The answer is 1 – The cost of selling a show worth £40 from the UK to Europe at an exchange rate of €2 will be €80. The cost of selling a show worth £40 from the UK to Europe now at an exchange rate of €1 will be €40, a cost decrease of €40.

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A UK business sells goods in Spain. The exchange rate between the pound and Euro increases from €1.5 to €2.

Which TWO of the following would be the MOST LIKELY results of this change in the exchange rate for a UK retailer?

Select TWO answers:

1. The price of the goods in Spain will increase
2. The price of the goods in Spain will decrease
3. The business will sell more abroad
4. The business will sell less abroad
5. The business will sell less in the UK

When exchanging from pounds to a foreign currency the rule is……?
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Business Studies KS4 classes.

The answer is 1 & 4 – The cost of selling a good worth £20 from the UK to Spain at an exchange rate of €1.5 will be €30. The cost of selling a good worth £20 from the UK to Spain at an exchange rate of €2 will be €40, a cost increase of €10.

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A small UK high street retailer obtains materials from a foreign supplier in the EU. The cost of buying each product is 30 Euros. The retailer sells the goods in the UK for £35 each. The exchange rate is currently £1= 1.5 Euros. It then changes to £1 = 2 Euros.

Which TWO of the following would be the MOST LIKELY results of this change in the exchange rate for the UK retailer?

Select TWO answers:

1. There will be no change because the price in the UK will stay the same
2. The cost of buying the goods from the EU will rise
3. The cost of buying the goods from the EU will fall
4. The business will have to exchange more pounds to get the same amount of Euros
5. The business will have to exchange less pounds for the same amount of Euros

What is an exchange rate?
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Business Studies KS4 classes.

The answer is 3 & 5 – The cost of buying €30 at an exchange rate of 1.5 is £20. The cost of buying €30 at an exchange rate of 2 is £15, a cost saving of £5.

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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?
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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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Rob owns a computer repair business. He has a small mortgage on his workshop, £3,000 fixed interest loan, and a small overdraft of £800. Most of his customers are people who have computers that are a few years old.

What TWO of the following are MOST LIKELY to be the effect on Rob’s businesses if interest rates decrease?

Select TWO answers:

1. The amount of interest paid on the loan will fall
2. The mortgage payment will increase
3. The amount of interest paid on the overdraft will fall
4. The business will cease to trade
5. Some customers may now choose to buy new computers and may not use Rob’s services
6. The amount of interest paid on the loan will rise

The interest rate set by the Bank of England is known as the?
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Business Studies KS4 classes.

The answer is 3 & 5 – The mortgage payment will likely fall as many mortgages are on variable rate leading, the loan interest will not change as it is fixed, but the overdraft payment is likely to fall as it too is on a b=variable rate. Rob’s customers usually have their computers repaired which are old. If interest rates go down, some may be tempted to buy new computers instead of having them repaired by Rob, as the interest cost on the moneys they might borrow to buy a new computer are lower.

This work is licensed under a Creative Commons Attribution 4.0 International License.