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WAEC Economics 2020 Question 38

Question 38

Financial Institutions

The central bank can reduce the ability of commercial banks to give out loans by

  1. A.raising the bank rate.
  2. B.reducing special deposit.
  3. C.reducing the liquidity ratio.
  4. D.issuing more currency.
Show the answer and explanation

Answer: A (raising the bank rate.)

Explanation

A higher bank rate makes borrowing dearer for banks and their customers.