A food-waste recycling firm is considering two arrangements for borrowing the same amount from the same lender. The firm's repayment history is the same for both arrangements.
| Arrangement | Term | Security |
|---|---|---|
| A | 3 years | Secured against machinery |
| B | 7 years | Unsecured |
Explain which arrangement is likely to have the higher interest rate.
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.