Evaluate the likely microeconomic and macroeconomic effects of a rise in interest rates in Turkey

Edexcel A-Level Economics Paper 3 June 2020 Insert

Evaluate the likely microeconomic and macroeconomic effects of a rise in interest rates in Turkey. (25 marks)

Plan

• Paragraph 1
  • Argument: one microeconomic effect of higher interest rates is an increase in costs for firms 
  • Diagram: increase in costs for firms 
  • Evaluation: businesses without loans would be unaffected
• Paragraph 2
  • Argument: one macroeconomic effect of high interest rates is slower economic growth 
  • Diagram: decrease in AD 
  • Evaluation: depends on the state of the economy 

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