O-LevelEconomicsGovernment and the macroeconomy2281/13 · Oct/Nov 2023 · Q121 Mark
In 2008–2009 the central bank of a developed country reduced interest rates from 5% to 0.5% per year to stimulate the economy. How would this policy have affected the amount saved and the cost of borrowing by individuals?
Aamount saved: decreased, cost of borrowing: decreased
Bamount saved: decreased, cost of borrowing: increased
Camount saved: increased, cost of borrowing: decreased
Damount saved: increased, cost of borrowing: increased
✓ Correct answer
A: amount saved: decreased, cost of borrowing: decreased
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