JAMB - Economics (2022 - No. 70)
What happens when the central bank increases the bank rate in an economy
borrowing is discouraged
customers increase their borrowing
banks can increase their lending
money supply increases
Spiegazione
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.