If the Central Bank increases its bank rate - JAMB Economics 2022 Question
If the Central Bank increases its bank rate
A
many banks will shut down their operations
B
customers will borrow more from banks
C
the supply of money may be reduced
D
interest charges by banks will fall
correct option: c
Option C is the correct answer.
An increase in the bank rate will cause commercial banks to raise their interest charges, leading to a reduction in borrowing by the general public and a decrease in the money supply due to the high interest rate.
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