Examine the potential impact on a business of an increase in interest rates.

Mark scheme

Marking points from the official mark scheme. The mark or mark type is shown in brackets.

1. • Knowledge 2, Application 2, Analysis 2
2. • Award up to 2 marks for knowledge of interest rates (e.g. defines interest rates, identifies how they affect borrowing/saving). (K)
3. • Award up to 2 marks for application to a business (e.g. relates to existing loans, new investments, consumer spending patterns affecting sales). (App)
4. • Award up to 2 marks for analysis of potential impacts (e.g. increased cost of borrowing leads to lower profits, reduced investment, decreased consumer spending, potential for job losses, cash flow problems, exchange rate effects). (An)
5. Maximum of 4 marks if only one impact is examined in depth. Must have at least two distinct impacts examined to achieve full marks.
6. NB: No evaluation required for an 'Examine' question.