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
C) Lower sales
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Answer
An increase in interest rates can lead to higher borrowing costs for consumers, which decreases their disposable income and can result in lower sales for Paul's business.
Step 2
D) Higher loan repayments
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Answer
Higher interest rates mean that any existing loans Paul has will result in increased repayments. This can strain the business's finances, leading to reduced cash flow.
