A group of furniture makers each pay a premium to the same insurance company to cover their workshops against fire damage. One workshop is damaged by fire and its owner makes a claim.
What enables the insurance company to pay this claim?
Using premiums from many customers to cover the losses of a few
Lending the owner the cost of repairs, to be repaid with interest
Using only the premiums that the owner of that workshop has paid
Borrowing from the Bank of England as lender of last resort
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.