Although central banks encouraged them, some commercial banks in 2015 were still unwilling to lend, particularly to the poor. If more lenders and borrowers had been attracted, commercial banks could have grown and hired extra workers. Higher employment would have made better use of a country’s labour force. In the long term, the size of a country’s labour force is likely to change.
(a)[2]
Identify two ways in which spending patterns differ between the poor and the rich.
(b)[4]
Explain two reasons why a commercial bank may prefer to lend to the rich rather than to the poor.
(c)[6]
Analyse the effects that an increase in the labour force would have on an economy.
(d)[8]
Discuss whether giving loans to the poor would reduce poverty.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Rich spend more while poor spend less” …