What can a central bank increase in order to reduce consumer borrowing ?
Correct answer: D. interest rates
- A. commercial bank deposits
- B. government bank deposits
- C. government spending
- D. interest rates
- E. None of these
Explanation
Raising interest rates makes borrowing more expensive, which discourages consumers from taking loans and reduces consumption financed by credit. Increasing deposits or government spending would not directly restrict consumer borrowing.
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