1. The Impact of Interest Rates
Question: When is interest a positive thing and when is it a negative? Give examples. (4 marks)
Question: What is credit? Give examples. (2 marks)
Question: Why do small businesses rely on credit?

2. Business Costs Interest rates Prices Demand Business Costs Interest
Increase
Business
Costs
Interest
rates
Prices
Demand
Decrease
Business
Costs
Interest
rates
Prices
Demand
Extension: In the second scenario, what else could business do with their prices? What impact would this have on profit?

3. Interest rates Demand Interest rates Demand Consumer Spending Consumer
Increase
Consumer
Spending
Interest
rates
Demand
Decrease
Consumer
Spending
Interest
rates
Demand
Extension: Why do interest rates affect consumer spending?

4. Interest Rates Inflation Demand Interest Rates Inflation Demand
Increase
Interest Rates
Inflation
Demand
Decrease
Interest Rates
Inflation
Demand
Extension: How do interest rates affect the amount of money people save?