Interest Rates/Exchange Rates
Interest Rates
L1
The cost of borrowing money
L3
Increase in rate will mean:
More saving – better returns
Less borrowing
Loans to expand cost more
Less people will be buying their goods/services
Mortgage repayments may increase
L4
Decrease in interest rates:
More spending
More borrowing
More likely to invest
Mortgages will decrease
Less saving – worse returns
L1
The cost of borrowing money
L3
Increase in rate will mean:
More saving – better returns
Less borrowing
Loans to expand cost more
Less people will be buying their goods/services
Mortgage repayments may increase
L4
Decrease in interest rates:
More spending
More borrowing
More likely to invest
Mortgages will decrease
Less saving – worse returns
Exchange Rates
SPICED
L1
The cost of one currency when compared to another
Appreciation – pound becomes stronger/ more valuable
Depreciation – pound is weaker/ less valuable
L3
-Can buy more foreign currency
-Importing (foreign supplies) is cheaper
-Lower input costs
-Reduction in price
-Disciplines firms to cut slack and inefficiencies
L4
-UK exporting firms – struggle to complete
-Reduction in demand for their goods overseas
-Forced to cut back
-Possible redundancy
-Could result in closure
SPICED
L1
The cost of one currency when compared to another
Appreciation – pound becomes stronger/ more valuable
Depreciation – pound is weaker/ less valuable
L3
-Can buy more foreign currency
-Importing (foreign supplies) is cheaper
-Lower input costs
-Reduction in price
-Disciplines firms to cut slack and inefficiencies
L4
-UK exporting firms – struggle to complete
-Reduction in demand for their goods overseas
-Forced to cut back
-Possible redundancy
-Could result in closure