Page 312 - Cambridge IGCSE Business Studies

Cambridge IGCSE Business Studies Section 6 External influences on business activity

Gregor Naledi is thinking about buying a house. He met with the bank manager to apply for a housing loan/mortgage. The
bank manager explained how changes in interest rates could affect how much he has to spend each month. He did this by

analysing the changes in interest rates and their impact over the last few years on a borrowed amount of 650,000 pula.

Year Interest rate Monthly payment (pula)

2008 14.5% 7,854
2009 15.5%

2010 10%
2011 9.5%
2012 9.5%

1 Copy and complete the table above.
2 Do you think the changing interest rates are likely to be helpful to Gregor?

TEST YOURSELF
1 List the main economic objectives of a country.
2 Explain how governments control the economic
TOP TIP
activity in their country.
Always answer the longer
questions in context. For 3 What are the main stages of a business cycle? Identify
310
example, when explaining the at least two characteristics of each stage.
impact of tax and interest rates 4 Make a list of some of the different types of taxes that

on businesses, make sure you affect businesses and consumers.

relate it to the business or country

5 Discuss the effect of an increase in income tax rate on
mentioned in the question.
consumers.
6 Explain how businesses are affected by a decrease in

interest rates.
7 How might businesses respond to an increase in
interest rates?