Two firms producing specialist sports equipment want bank loans to buy machinery. Commercial banks approve less than each firm requested.
| Firm | Loan requested | Loan approved |
|---|---|---|
| Northfield Equipment | £800,000 | £500,000 |
| Vale Sportswear | £600,000 | £300,000 |
Calculate the total amount by which the loans approved fall short of the loans the two firms requested.
Using your answer to (a), explain how the banks' lending decisions could affect economic activity.
60 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.