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Increase in the interest rate would affect

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In order to produce goods and services, businesses require resources. Businessesface choices in the way resources are used and this inevitably leads to opportunitycost. The same is also true for households who face choices every day. The Silva family used their savings to set up their own ice cream business. Thebusiness has recently expanded throughout the European Union. In order to expandthey took out a loan from the bank when interest rates were low. The Silvas wereinspired by other Scottish entrepreneurs who have successful businesses throughoutthe world.

(a) Describe, using an example, what is meant by the term "opportunity cost".

(b) Apart from a bank loan, identify one way the Silva family could borrow money.

(c) Explain, in what ways, an increase in the interest rate would affect:

(i) savers;

(ii) borrowers

Reference no: EM131083152

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Increase in the interest rate would affect : (a) Describe, using an example, what is meant by the term "opportunity cost".(b) Apart from a bank loan, identify one way the Silva family could borrow money.(c) Explain, in what ways, an increase in the interest rate would affect:
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