A) Market rate of interest is likely to fall
B) Central Bank is no longer making loans to commercial banks
C) Central Bank is following an easy money policy
D) Central Bank is following a tight money policy
Correct Answer: D
Solution :
A tight monetary policy is a course of action undertaken by Central bank to constrict spending in an economy, or to curb inflation when it is rising too fast. The increased bank rate increases the cost of borrowing and effectively reduces its attractiveness.
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