In December, the Bank of England Reduced Interest Rates by Another

question 103

Multiple Choice

In December, the Bank of England reduced interest rates by another 50 basis points (a basis point is 0.01 percentage point) after it had cut them by 150 basis points in November. But the rate cut may even be larger. Economists "... expect the Monetary Policy Committee [MPC] to cut rates to 2.5 percent,"...while others "...saw a bigger 75 point cut"...or "a 100 basis point move." Reuters, 11/27/2008
In order to ________, the Bank of England's rate cut must ________.

• A) decrease consumption; increase the long-run interest rate
• B) increase real GDP; decrease the nominal long-run interest rate
• C) decrease real GDP; increase the real long-run interest rate
• D) increase consumption; decrease the real long-run interest rate

---

Definitions:

Privately Held

A description of a company whose ownership is private, meaning its shares are not traded on public stock exchanges.

Legal Costs

Legal Costs are expenses related to legal services such as attorney fees, court fees, and other expenditures incurred in the process of legal advice, litigation, or legal settlement.

Organization Expense

Costs associated with forming a business entity, such as legal fees, registration charges, and administrative expenses.

Market Value

The ongoing rate at which services or assets are being traded in the market.