A mobile catering business keeps its cash reserve in a savings account and has a variable-rate equipment loan. The annual interest rates on both products change as shown.
| Product | Balance | Old annual interest rate | New annual interest rate |
|---|---|---|---|
| Savings account | £18,000 | 2.2% | 2.8% |
| Equipment loan | £11,500 | 5.4% | 7.2% |
The new rates apply for one year. Ignore compounding.
Calculate the direct change in the business's net monthly interest position. State whether its position improves or worsens.
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.