If a central bank increases interest rates,then gradually:
A) the country's gross domestic product is likely to increase.
B) foreign exchange rate is likely to come under downward pressure.
C) demand for imported goods and services is likely to decrease.
D) flows of investment funds into the country are likely to decrease.

Question

Quizplus · Accepted Answer

When a central bank increases interest rates, borrowing becomes more expensive, which can reduce spending and investment, leading to a decrease in demand for imported goods and services as consumers and businesses cut back on expenses.

If a Central Bank Increases Interest Rates,then Gradually