Which one of the following statements is NOT correct?
A) A repurchase agreement is the sale of a non-monetary asset together with an agreement to repurchase it at a specified future date.
B) The difference between the price at which a commercial bank sells an asset to the central bank and the price at which it agrees to buy it back can be expressed as an annualized percentage of the selling price, and this is called the refinancing rate.
C) In the UK the refinancing rate is known as the repo rate.
D) If the central bank raises its refinancing rate then the commercial banks will try to increase their lending.

Question

Quizplus · Accepted Answer

If the central bank raises its refinancing rate, commercial banks are likely to decrease their lending because borrowing becomes more expensive.

Which One of the Following Statements Is NOT Correct