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
jamb 2022english-language

The correct answer is A. borrowing is discouraged

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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