When the Central Bank lowers the bank rate, borrowing from the central bank becomes cheaper and commercial banks borrow more from it. The commercial banks,
in turn, lower their lending rates to the business community and borrowers borrow more from the commercial banks. There is expansion of credit and prices are checked from falling further. This action checks
Select one:
a. deflationary pressure
b. contraction of credit
c. rising lending rate
d. All
= All
Answers: 2
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When the Central Bank lowers the bank rate, borrowing from the central bank becomes cheaper and comm...
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