JAMB Economics 2020 Objective — Question 30

Question 30 of 50 from the Joint Admissions and Matriculation Board (JAMB) Economics 2020 Objective paper, with the correct answer and a full explanation.

If CBN reduces money supply, the interest rate will

A. fluctuate
B. riseCorrect
C. fall
D. remain unchanged

Explanation

Reducing the money supply makes loanable funds scarcer, which tends to push the interest rate up.

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