Interest Rates

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  • Created by: Jess
  • Created on: 02-12-12 18:58
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  • Interest Rates
    • The cost of borrowing money.
    • The amount gained on savings
    • Charged on
      • credit cards
      • overdrafts
      • mortgages
      • loans
      • hire purchases agreements
    • The Bank of England
      • It's currently 0.5% and has been for about 3 years
      • Meet monthly to decide if interest rates need to change
      • Set the interest rates.
    • Impact of increasing interest rates
      • increases prices
        • menu costs
      • reduced investment & spending
      • increased costs of living
      • increased business costs
        • raw materials etc - show leather costs
      • reduced house buying
        • increases in renting
      • increased cost of borrowing
        • reduces customer spending
    • value of the pound
      • increased value of the pound
      • exports become more expensive
      • imports become cheaper
      • more investment could come into the uk
    • impact of businesses
      • increased wage demands
      • increased  costs
      • delayed growth plans
    • Impact on consumer spending - high interest rates
      • cut back on loans
      • reduced demands for houses
        • constructing industry will suffer
      • less likely to buy on credit
        • cars, sofas, holidays
      • increased rates on savings
      • higher mortgage payments
      • increased value of the pound
      • luxury goods will suffer the most
      • demand for cheaper and value products could increase

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