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WAEC Economics 2022 Question 37

Question 37

Financial Institutions

If the Central Bank increases its bank rate

  1. A.many banks will shut down their operations
  2. B.customers will borrow more from banks
  3. C.the supply of money may be reduced
  4. D.interest charges by banks will fall
Show the answer and explanation

Answer: C (the supply of money may be reduced)

Explanation

Dearer borrowing reduces lending and money supply.