Angola is an African nation that does not have a stock exchange. By contrast, South Africa has the busiest stock exchange in Africa. Companies in South Africa are also far bigger than companies in Angola, and South African companies borrow more from commercial banks. However, both countries have a low saving rate, which could rise if the rate of interest were increased.
(a)[2]
Define the term saving.
(b)[4]
Explain two advantages that a country may obtain from having a stock exchange.
(c)[6]
Analyse how firms may be affected when the rate of interest rises.
(d)[8]
Discuss whether an economy will benefit from its firms becoming larger.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Income that is not spent” …