Several banks become unwilling to lend to one another because they doubt that loans will be repaid. Which chain best explains why this threatens the wider economy?
Bank lending falls, firms struggle to finance investment and economic activity may weaken
Bank lending rises, firms reduce investment and economic activity strengthens
Deposits become taxes, government spending rises and inflation must fall
Interest rates become irrelevant, borrowing rises and every firm expands
27 exam-style questions on AQA GCSE Economics 2.5 The role of money and financial markets, covering 2.5.1a Functions of money, 2.5.1b Definition of money, 2.5.2a Agents in the financial sector, 2.5.2b The role of the Bank of England, and 2.5.2c The role of high street banks. Each one has a worked solution and a mark scheme showing where the marks go.