Item A: Northstar Cycles is a UK business that imports components priced in US dollars and exports finished bicycles to eurozone retailers.
| Economic information | Previous year | Current year |
|---|---|---|
| Exchange rate | £1 = $1.18 | £1 = $1.30 |
| Exchange rate | £1 = €1.16 | £1 = €1.23 |
| UK interest rate | 4.0% | 5.5% |
State the increase in the UK interest rate in percentage points.
Outline one effect of the change in the pound-dollar exchange rate on Northstar Cycles.
Northstar Cycles has a variable-rate bank loan and is considering two pricing responses:
Option 1: Reduce its euro selling price to remain competitive
Option 2: Keep its euro selling price unchanged
Justify which one of these two responses Northstar Cycles should choose.
37 exam-style questions on Edexcel GCSE Business 1.5 Understanding external influences on business, covering 1.5.1a Business stakeholders and their objectives, 1.5.1b How stakeholders and businesses affect each other, 1.5.1c Conflicts between stakeholder groups, 1.5.2a Types of technology used by business, 1.5.2b How technology influences business activity, 1.5.3a Principles of consumer law, 1.5.3b Principles of employment law, 1.5.3c The cost impact of legislation, 1.5.3d Consequences of meeting legal obligations, 1.5.4 The economy and business, and 1.5.5 External influences. Each one has a worked solution and a mark scheme showing where the marks go.