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GCE Commerce 1989 Question 61

Question 61

Banking

Through which of the following does the Central Bank carry out the monetary policy of the country?

  1. A.Discounting bills
  2. B.bank rate
  3. C.Granting overdrafts
  4. D.Acting as lender of last resort
  5. E.Acting as banker to commercial banks
Show the answer and explanation

Answer: B (bank rate)

Explanation

By raising or lowering the bank rate the Central Bank makes credit dearer or cheaper, which controls money supply.