The Central Bank of Baltonia decided to lower the interest rate that banks use to make loans to each other when the growth rate of Baltonia's output fell. What will be the effect of this policy on Baltonia's economy?
What will be an ideal response?
If the Central Bank of Baltonia decides to lower the interest rate that banks use to make loans to each other, banks will make more loans. If banks make more loans, the availability of credit will increase and the interest rate will fall. This will lead to an increase in investment. As a result, output and employment will increase.
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All developed countries achieve their status as a result of large supplies of natural resources
a. True b. False
An appreciation of the British pound relative to the euro will cause England's:
a. Aggregate supply and aggregate demand to rise, which causes prices to rise and real GDP to fall. b. Aggregate supply to rise and aggregate demand to fall, which causes prices to rise and real GDP to fall. c. Aggregate supply to rise and aggregate demand to fall, which causes prices to fall and real GDP to change by an uncertain amount. d. Aggregate supply and aggregate demand to fall, which causes prices to rise and real GDP to fall.