A theatre company keeps its cash reserve in a deposit account and used a variable-rate loan to pay for new lighting. The rates applying for the next year change as shown.
| Account | Balance | Previous annual rate | New annual rate |
|---|---|---|---|
| Deposit account | £11,000 | 5% | 3% |
| Variable-rate loan | £7,000 | 7% | 5% |
Assuming simple interest, what happens to annual interest received minus annual interest paid?
It falls by £220
It falls by £80
It rises by £80
It rises by £140
82 exam-style questions on OCR GCSE Economics 2.8 The role of money and financial markets, covering 2.8.1 Money as a medium of exchange, 2.8.2 Role of the financial sector, 2.8.3 Importance of the financial sector, 2.8.4 Interest rates and saving, borrowing, investment, and 2.8.5 Effect of interest rate changes. Each one has a worked solution and a mark scheme showing where the marks go.