Clarke sticks by latest rate cut

1 	Identify the impact that the interest rate cut may have on:
	a) business.
	b) consumers.

2 	The article suggests that the Chancellor of the Exchequer and the Governor 	of the Bank of England disagreed about the desirability of a cut in the base 	rate. Why might Eddie George, the Governor of the Bank of England, think a 	cut in interest rates ill-advised?

3 	Produce a flow diagram to show how a reduction in base rates may lead to a 	reduction in the number of people unemployed.

4 	Why might a reduction in the unemployment rate lead to a fall in the PSBR? 

5 	Interest rates are referred to as 'a macro-economic variable'. Explain what 	you understand by the term.

6 	Discuss the effect that a reduction in interest rates may have upon the 		exchange rate and Britain's International Trade.