The central bank Can reduce the ability of commercial banks to give out loans by...
ECONOMICS
WAEC 2020
The central bank Can reduce the ability of commercial banks to give out loans by
- A. raising the bank rates
- B. reducing special deposits
- C. reducing the liquidity ratio
- D. issuing more currency
Correct Answer: A. raising the bank rates
Explanation
One way the central bank can reduce the rate at which banks lend money is by raising the interest rates bank charge on loans, this will discourage people from borrowing from commercial banks.
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