Interest rates (Edexcel GCSE Business): Quizzes
📚Quizzes
Practise the questions
13 questions from this quiz
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Practise the questions
13 questions from this quiz
What do interest rates represent for borrowers?
What do interest rates represent for borrowers?
The percentage cost of borrowing money
Which two financial services do banks typically provide to businesses?
Which two financial services do banks typically provide to businesses?
Business loans and overdrafts
What are the two key costs businesses face when borrowing?
What are the two key costs businesses face when borrowing?
Interest on loans & overdraft charges
What is the main advantage of fixed interest rates for businesses?
What is the main advantage of fixed interest rates for businesses?
They provide predictable costs
What is a disadvantage of fixed interest rates?
What is a disadvantage of fixed interest rates?
Cannot benefit if interest rates fall
For which type of business are fixed rates ideal?
For which type of business are fixed rates ideal?
Those prioritising predictability
What causes variable interest rates to change?
What causes variable interest rates to change?
Market conditions & economic factors
What potential advantage do variable rates offer businesses?
What potential advantage do variable rates offer businesses?
May benefit if rates decrease
How do rising interest rates affect business borrowing decisions?
How do rising interest rates affect business borrowing decisions?
Businesses less likely to borrow
How do rising interest rates affect consumer spending?
How do rising interest rates affect consumer spending?
Customers reduce spending
What happens to business cash flow when interest rates fall?
What happens to business cash flow when interest rates fall?
It improves as debt becomes cheaper
How do falling interest rates affect consumer disposable income?
How do falling interest rates affect consumer disposable income?
Income increases, boosting demand
If a business borrows £100,000 at 5% interest, what is the annual interest cost?
If a business borrows £100,000 at 5% interest, what is the annual interest cost?
£5,000