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WAEC Economics 2018 Question 37

Question 37

Financial Institutions

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

  1. A.Borrowing is discouraged
  2. B.Customers increase their borrowing
  3. C.Banks can increase their lending
  4. D.Money supply increases
Show the answer and explanation

Answer: A (Borrowing is discouraged)

Explanation

A higher bank rate raises all interest rates, so borrowing falls.