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2.1 Introduction to the national economy

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Question 37

A touring theatre company asks to extend the repayment term on a business loan from three years to nine years. The amount borrowed, the company's risk of non-repayment, the security offered, competition between lenders and the Bank of England base rate do not change.

Which statement best explains why the lender may change the interest rate on the revised loan?

[1]
A

The lender's money will be tied up for a longer period

B

The total interest is spread over more years, so the yearly rate falls

C

The company will earn interest for keeping the borrowed money for longer

D

The company will repay the same sum in smaller yearly amounts

Markscheme

2.1 Introduction to the national economy Questions

  1. GCSE
  2. /Economics
  3. /2.1 Introduction to the national economy

75 exam-style questions on AQA GCSE Economics 2.1 Introduction to the national economy, covering 2.1.1a What an interest rate is, 2.1.1b Interest rates and consumer decisions, 2.1.1c Interest rates, producer decisions and calculations, 2.1.2a UK government revenue and spending, and 2.1.2b Direct, indirect and progressive taxation. Each one has a worked solution and a mark scheme showing where the marks go.

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