A furniture wholesaler gives its retail customers 60 days to pay, but its staff wages are due this week. Interest rates have just fallen, yet the wholesaler's bank turns down its request for a short-term loan.
What is the most likely effect on the wholesaler?
Its retail customers will pay sooner now that borrowing has become cheaper
It can no longer receive its customers' payments into its bank account
The lower interest rates let it meet its wage bill without needing a loan
It faces a cash shortage that the lower interest rates do not solve
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.