GWC N5 Economics Personal Economics

Other than a mortgage, identify 2 methods of borrowing available to individuals. (2)

• Credit card

• Hire purchase

• ISA

• Premium bonds

Identify 2 types of savings account offered by financial organisations. (2)

• Current account

• Cash ISAs (Individual Savings Accounts)

• Regular savings account

• Overdraft

Which of the following is not an advantage of a credit card? (1)

• Purchases can be paid for at a later date

• More secure if there is a problem with a retailer and they are unable to fulfil the order

• Can pay off in instalments

• Money is received into a person's bank account as soon as it has been approved

Which of the following is not a disadvantage of a bank loan? (1)

• Only once the final payment is made does a person who the item purchased

• A person pays back more than they have borrowed

• Can be difficult for bank loans to be approved depending on your financial circumstances

• Encourages unaffordable spending

Identify 2 different types of financial institutions that lend to individuals. (2)

• Pay day loan companies e.g. Sunny

• Building society e.g. Nationwide

• Department stores

• Friends & family

Which of the following is not a piece of advice that a potential borrower might find useful before taking out a loan? (1)

• Do not borrow more than you can repay/make sure you can keep up with repayments

• Compare rates of interest before borrowing

• Complete a personal income and expenditure statement/cash budget to calculate affordability

• Do not borrow if your job is insecure

• Exaggerate your income to borrow more

What are THREE likely effects of an increase in interest rates on an individual? (3)

• The value of savings will increase

• People are likely to save more

• Cost of mortgage repayments/borrowing will rise

• First time buyers will be more able to afford a mortgage

Identify 2 economic factors that might affect consumer confidence (2)

• Uncertainty in the economy e.g. a recession

• Exchange rate fluctuations

• A new piece of legislation

• A war

Disposable income is income after deductions such as... (1)

• Income tax

• Mortgage payments

• VAT

• Council tax

Suggest 2 ways in which households can plan for financial uncertainty. (2)

• Take out a pay day loan

• Saving more

• Spend more

• Creating a budget