a) Two reasons why borrowing might have increased in South Korea:

1. Government lending to small firms: In the early 2000s, the South Korean government initiated
lending programs to support the growth and development of small firms.
2. Housing boom: The housing boom in 2011 created a surge in property prices, providing an
incentive for individuals to borrow money to purchase property.
b) Two problems that may arise because of a low savings ratio in South Korea:
A low saving ratio means that banks will have a limited amount of money which they are able to lend to
borrowers. This will lead to high interest rates.
As banks have limited amounts of money they are forced to borrow money from overseas, which foreign
exchange occurs leading to higher interest rates.

C: A high ratio of borrowing to disposable income can have several effects on the economy:
1. 1. Consumer Spending: People may have less money for them to spend on products and services
if a higher proportion of their income goes to paying debt. This will result in less spending by
consumers.
2. Economic Inequality: If a person has high debt levels then they will be charged higher interest
rates and they will have reduced disposable income in comparison to those with lower debt
levels.

D: The decision to spend or save income can be influenced by a variety of factors:

1. Income Levels: Individuals with higher income levels might be able to afford to save more of
their income, while those with lower income levels might need to spend a larger portion of their
income on necessities.
2. Age: Young people will spend a lot as they might not save in their youth but later on the might
start saving for their futures.
3. Planning for future: People might save their income for the future if they want to buy a home or
for retirement.`
4. Unforeseen future: People might want to save income for sudden emergencies or for inflation
because in inflation the value of money decreases.
5. Personal Needs: Some people might spend money as they want to buy luxury items and services.
6. Attitude to spending: In some countries people save money for unseen future and sudden
emergencies but in other countries such as UK and USA people over there get loans to buy
expensive and luxurious items.
7. Interest rates: If interest rates are high people would tend to save more but when interest rates
are low people will spend and borrow more money.
8. Wealth: When people are wealthy, they will save less money but spend more money on
expensive items to maintain their status.,
9. Confidence levels: If the confidence levels are high then people would spend more.