In order to encourage investment in the economy, the central bank may ______.

Question

KollegeApply · Accepted Answer

In order to encourage investment in the economy, the central bank may Reduce cash reserve ratio. Explanation: 1. The central bank reduces the cash reserve ratio (CRR), allowing commercial banks to keep fewer reserves while having greater funds to lend. 2. This boosts the economy's money supply and encourages investment by providing more loans to businesses and consumers at lower interest rates. 3. The other options, such as raising the CRR or bank rate, would limit the money supply, discouraging investment.

AChoose Your Answer