Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Topic 1.5: Understanding the economic context revision points Chapter 25: The impact of interest rates Credit is another word for loan. It is a means of getting something expensive now and paying for it in smaller regular amounts over a period of time in the future. Those lending money need to know that the borrower is credit worthy – that they will be able to pay back the loan and the interest. Long-term borrowing is usually for large fixed items e.g. machinery, sometimes agreed at a fixed interest rate. An overdraft is short-term means of helping cash flow. It is a loan to be used when needed. It is a useful back up for businesses. It can be expensive but interest is only paid on the amount overdrawn not the full limit. Interest rates are the percentage reward to savers or paid on loans by borrowers. High interest rates – good for savers, bad for borrowers. Low rates interest – bad for savers, good for borrowers. If interest rates rise it tends to discourage borrowing and reduce consumer spending – bad for businesses. If interest rates fall it can encourage borrowing and spending – good for businesses. © Pearson Education Ltd 2009 Edexcel GCSE Business Studies page 1