Economics 2281 · O Level · Monetary policy

Monetary policy — practice question

A country’s central bank increased the rate of interest from $1\%$ to $4\%$ per year. In what way would this have influenced the amount saved and the cost of borrowing for individuals?

  • 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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