A household has £4,000 in a savings account and is deciding whether to buy a new appliance now or leave the money in the account for one year. The account pays the rate shown below, with interest calculated on the original balance and no compounding.
| Period | Annual interest rate |
|---|---|
| Before the change | 2.5% |
| After the change | 4.5% |
Calculate the increase in the interest the household would earn over one year after the rate change.
Explain how the rate change could affect the household’s decision about when to buy the appliance.
116 exam-style questions on OCR GCSE Economics 3.6 Monetary policy, covering 3.6.1 What is monetary policy, 3.6.2 Monetary policy and macro objectives, and 3.6.3 Effects of monetary policy. Each one has a worked solution and a mark scheme showing where the marks go.