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Question about Financial Sector: Advanced

Economics

Originais Teachy

Financial Sector: Advanced

Medium

(Originais Teachy 2023) - Question Medium of Economics

In an effort to stimulate economic growth, a country's central bank decides to implement a series of monetary policies. One of these involves lowering the interest rates. Based on your understanding of the financial sector, what impact could this action have on the banking system and the behavior of individual investors?
a.
Lowering interest rates will lead to decreased borrowing and loan activity, reducing profits for banks, and discouraging investors from borrowing money for investments.
b.
Lowering interest rates can lead to increased borrowing and loan activity, potentially maintaining or increasing profits for banks, while also encouraging investors to borrow more money for investments but decreasing the return on savings or certain types of investments tied to interest rates.
c.
Lowering interest rates will have no impact on the banking system or individual investors.
d.
Lowering interest rates will lead to decreased borrowing and loan activity, but will result in increased profits for banks, and will encourage investors to borrow more money for investments.
e.
Lowering interest rates will lead to increased borrowing and loan activity, but will result in decreased profits for banks, and will discourage investors from borrowing money for investments.

Answer:

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