Question

Analyse how a central bank might reduce household borrowing

Answer 1

Central Bank may reduce household borrowing by the following measures:

• increase the price of loans, increase the rate of loans
• increase the price of loans, increase the rate of loans
• improving the well-being of the population: reducing the tax burden, increasing the minimum wage
• supporting the poor through government transfers
• inflation control in the country
• supporting young families through subsidizing mortgages, providing maternity capital
• Increase in deposit rates

Of course, all these measures can be implemented through commercial banks and the government.