A reduction in interest rates, causes an increases in the monetary base that results in an _________ in the availability of consumer credit and a ________ in the cost of consumer credit?
Correct answer: C. increase, reduction
- A. reduction, increase
- B. reduction, reduction
- C. increase, reduction
- D. increase , increase
Explanation
Lower interest rates make borrowing cheaper, so the availability and use of consumer credit generally increase while its cost decreases. Thus the sequence is increase in availability followed by reduction in cost.
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