1. Influences on Business

Question 1

What happens if interest rates go up?

Answer 1

If interest rates go up …

• Borrowing money becomes MORE EXPENSIVE for a business as it has to PAY BACK MORE INTEREST on the LOANS
• Customers will have LESS money to spend because they are paying more interest on their MORTGAGES - so less money to spend on items
• Businesses may put of buying new equipment this could lead to a reduction in production