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This exam-style question delves into the economic implications of the Bank of England's decision to maintain its interest rate at a 16-year high of 5.25%. The scenario highlights the impact of interest rates on consumer spending, particularly discretionary spending, as discussed by Sainsbury's CEO, Simon Roberts. It provides an opportunity to explore how interest rates influence consumer behavior, business operations, and overall economic activity.

Key Concepts:

  • Consumer spending
  • Factors affecting consumer spending.
  • Impact of interest rate changes on businesses
  • Benefits and drawbacks of interest rate cuts for consumers

Engage with this exercise to deepen your understanding of these crucial economic concepts and apply them to real-world situations.


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