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What happens when the central bank increases the bank rate in an economy

Economics
JAMB 2022

What happens when the central bank increases the bank rate in an economy

  • A. borrowing is discouraged
  • B. customers increase their borrowing
  • C. banks can increase their lending
  • D. money supply increases
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Correct Answer: Option A
Explanation

Central bank discourage borrowing when bank rate is increased. Bank rate is one of the ways the central bank control money supply in an economy. If the bank rate is high, the supply of money will fall and vice versa.


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Post-UTME Past Questions - Original materials are available here - Download PDF for your school of choice + 1 year SMS alerts
NECO June/July 2024 - Get offline past questions & answers - Download objective & theory, all in one app 48789
Join your school's WhatsApp group
Join your school's WhatsApp group
Post-UTME Past Questions - Original materials are available here - Download PDF for your school of choice + 1 year SMS alerts
NECO June/July 2024 - Get offline past questions & answers - Download objective & theory, all in one app 48789