Post Utme Oau 2020 Economics Question 14

Practice objective / multiple choice question 14 from the 2020 Post Utme Oau Economics examination.

Post Utme Oau 2020 Economics Objective / Multiple Choice
Question 14 POST_UTME_OAU • 2020 • ECONOMICS • objective

A central bank uses monetary policy to control inflation by increa\sing the reserve requirement for commercial banks. This action will lead to a decrease in the money supply because banks will have to hold more reserves and l\end less. What is the effect of this action on the interest rate?

Answer Options

Correct Answer A. The interest rate increases.
B. The interest rate decreases.
C. The interest rate remains cons\tant.
D. The interest rate becomes zero.
Correct Answer
A
Correct Option:
The interest rate increases.

About This Question

This is Post Utme Oau 2020 Economics Question 14. It is one of the objective questions from the 2020 Post Utme Oau Economics examination.

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