If a Central Bank Wants to Reduce Interest Rates It

question 6

Multiple Choice

If a central bank wants to reduce interest rates it will instruct its traders to:

• A) instruct all financial institutions to adjust rates accordingly.
• B) reduce liquidity in financial markets.
• C) buy bonds on the open market.
• D) carry out open market operations by buying shares on the stock exchange.

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Definitions:

Price War

A competitive situation where rival companies continuously lower prices to undercut each other, aiming to increase market share.

Price Sensitive

A characteristic of consumers who are highly responsive to changes in prices, affecting their willingness to buy products or services.

Promotional Campaign

A series of advertisements or efforts aimed at increasing awareness or sales of a specific product or service.

More Inelastic

Describes a situation where the demand for a product or service is less responsive to changes in price.