Economics 2281 · O Level · Monetary policy

Monetary policy — practice question

The table sets out possible relationships between the rate of interest and other economic variables. Which sequence is most likely?

  • Ahigher interest rate, borrowing decrease, investment increase, GDP increase
  • Bhigher interest rate, borrowing increase, investment decrease, GDP decrease
  • Clower interest rate, borrowing decrease, investment decrease, GDP decrease
  • Dlower interest rate, borrowing increase, investment increase, GDP increase

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