Economic Influences on Business: Edexcel A Level

Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the
general marking guidance. The indicative content below exemplifies some of
the points that candidates may make but this does not imply that any of these
must be included. Other relevant points must also be credited.
Knowledge, Application, Analysis, Evaluation - indicative content
- Interest rates are the amount of interest due per period of time as a
proportion of the amount deposited, lent or borrowed
- The interest rate in Egypt rose from about 8% in 2010 to nearly 19% in
2018
- A rise in the interest rate would make the cost of borrowing more
expensive and reduces the disposable income of Egyptian customers who
have a loan, encouraging saving not spending
- Although clothing is necessary, it is less likely to sell if Egyptian consumers
have a reduced disposable income
- In order to increase sales domestically Lotus Garments Co. may need to
borrow money to finance an advertising campaign to promote its goods or
to conduct market research
- Given the increasing interest rate, it is probably not a good time for Lotus
Garments Co. to consider expanding sales domestically
- However, Lotus Garments Co. exports the majority of its denim to the USA
and so the customers would not be affected by the Egyptian interest rate
- There is no information about how much or whether Lotus Garments Co.
actually borrows money at the moment
- As it can produce 26,000,000 items of clothing a year, Lotus Garments Co. is
likely to be a large business which may not be affected greatly by interest
rates
- Lotus Garments Co. may have profits invested which could generate more
income when the interest rate is high
- It may depend on other economic influences such as the exchange rate. A
high interest rate may encourage foreign investment meaning the value of
the Egyptian currency (Egyptian pound) may rise, possibly leading to a fall
in exports due to the price of jeans becoming more expensive
- It depends whether the trend of rising/high interest rates continues and
on other economic influences such as the rate of inflation or level of
wages in Egypt


Level

Mark

Descriptor

0

A completely inaccurate response.

Level 1

1-2


Isolated elements of knowledge and understanding - recall based.

Weak or no relevant application to business examples.

Generic assertions may be presented.


Level 2

3-4


Elements of knowledge and understanding, which are applied to the business example.

Chains of reasoning are presented, but may be assertions or incomplete.

A generic or superficial assessment is presented.


Level 3

5-7


Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context.

Analytical perspectives are presented, with developed chains of reasoning, showing cause(s) and/or effect(s).

An attempt at an assessment is presented, using quantitative and/or qualitative information, though unlikely to show the significance of competing arguments.


Level 4

8-10


Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context.

A coherent and logical chain of reasoning, showing cause(s) and/or effect(s).

Assessment is balanced, wide ranging and well contextualised, using quantitative and/or qualitative information and shows an awareness of competing arguments/factors, leading to a supported judgement.