Practise applying interest rate changes to borrowing, repayments, consumer spending and business decisions in case studies.
Cadbury was founded in 1842 when John Cadbury opened a shop in Birmingham in the UK. The shop sold cocoa and drinking chocolate. Cadbury is now one of the major chocolate manufacturers in the world.
In 1918 the first overseas Cadbury factory was opened in Hobart, Tasmania in Australia. Another factory opened in South Africa in 1938. Cadbury chocolates are sold across the world and other factories have been opened. Cadbury produces many well-known brands, such as Dairy Milk, Buttons and Crunchie. It also produces ice cream and cakes.
Cadbury is now part of Mondelez, the largest snack business in the world.
Explain one advantage for businesses if banks reduce their interest rates.
A01-3 marks
Award 1 mark for identification of an advantage for a business if the banks reduce their interest rates, plus 2 further marks for explaining the reason, for a maximum of 3 marks.
- This means that if a business took out loans (1) monthly repayments would be lower (1) leaving more funds for other business expenses (1)
- If the interest rates are reduced, then customers may have more funds available (1) to spend on goods/products (1) thus increasing the turnover of businesses (1)
NB No marks are awarded for a definition.
Answers that list three advantages with no explanation will get 1 mark only.
Accept any other appropriate response.
(3)