Economics 0455 · IGCSE · Monetary policy

Monetary policy — practice question

The central bank of a country increased the interest rate from $1\%$ to $4\%$ per year. How would this change have affected how much individuals saved and the cost of borrowing?

  • Aamount saved decreased; cost of borrowing decreased
  • Bamount saved decreased; cost of borrowing increased
  • Camount saved increased; cost of borrowing decreased
  • Damount saved increased; cost of borrowing increased

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