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Identify two possible effects of this change in the interest rate on Paul's business - Edexcel - GCSE Business - Question 4 - 2015 - Paper 1
Question 4
Identify two possible effects of this change in the interest rate on Paul's business. Select two answers: A. Greater competition from rivals B. Increased variable... show full transcript
Worked Solution & Example Answer:Identify two possible effects of this change in the interest rate on Paul's business - Edexcel - GCSE Business - Question 4 - 2015 - Paper 1
Step 1
Select two answers:
Answer
The two possible effects of a change in the interest rate on Paul’s business are:
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C. Lower sales - An increase in interest rates can lead to higher borrowing costs for consumers, which may cause them to reduce their spending, ultimately leading to lower sales for businesses like Paul’s.
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D. Higher loan repayments - When interest rates rise, businesses with existing loans will face higher repayment amounts due to increased interest costs, impacting their overall financial situation.