Angola is an African nation that does not have a stock exchange. By comparison, South Africa has the busiest stock exchange in Africa. Companies in South Africa are also far larger than companies in Angola, and South African firms also borrow more from commercial banks. However, saving rates are low in both countries, and they could rise if the rate of interest were increased.
(a)[2]
Define the term saving.
(b)[4]
Explain two benefits a country may gain 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, or will not, 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” …