Which action can a central bank take to discourage consumers from borrowing more?

Multiple choice question for Basic of Economics. Select an option, then review the explanation below.

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Raise the deposits held by commercial banksIncrease deposits in government accountsBoost government expenditureElevate interest ratesNone of the above

Explanation

By increasing interest rates, a central bank makes borrowing more expensive, which tends to reduce the amount of consumer loans taken out. Other options such as altering bank deposits or government spending do not directly influence consumer borrowing behavior in the same way.

Practice related questions from the same subject.

1.Which of the following best describes deflation?
2.Under what condition can two nations benefit from engaging in international trade?
3.Which of the following represents a legitimate form of currency?
4.Which political ideology is best summarized by the phrase, "From each according to his ability, to each according to his needs"?
5.Which type of currency experiences a decline in its exchange rate due to a continuous balance of payments deficit?

Which action can a central bank take to discourage consumers from borrowing more?

Explanation

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