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22. If the Central Bank reduces the bank rate, this will cause …… (a) commercial banks to reduce lending (b) commercial banks to merge (c) money supply to increase (d) money supply to reduce 23. A change in the real value of wealth that causes spending to change when the level of prices changes is known as: (a) interest rate effect (b) International-Substitution effect (c) Consumption effect (d) Real Balance effect 24. If the economy is in an inflationary period, what action would Fiscal authority most likely take? (a) Decrease taxes (b) Decrease the discount rate (c) Increase government spending (d) Increase taxes 25. ....... is a process where Central Bank classifies borrowing into preferred and less preferred sectors of the economy (a) Selective ratio (b) Credit ceiling (c) Selective ratio (d) None
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