Question:

Discuss the likely consequence on money supply if the rate-setting panel had decreased the said rate.

Show Hint

Lower interest rates increase money supply and stimulate economic activity but can lead to inflationary pressures.
Updated On: Jan 30, 2025
Hide Solution
collegedunia
Verified By Collegedunia

Solution and Explanation

Cheaper Loans: Lower interest rates encourage borrowing by businesses and households. 
Increased Liquidity: More borrowing increases liquidity, boosting consumption and investment.

Was this answer helpful?
0
0

Top Questions on Cost Function and Marginal Cost

View More Questions