If interest rate spreads widen,central banks may have to ___________ to offset the rise interest rate spreads
A) increase their key policy rates
B) decrease their key policy rates
C) increase the operating band
D) decrease the operating band
E) increase the effective lower bound

Question

Quizplus · Accepted Answer

If interest rate spreads widen, it means that the interest rates on lending and borrowing money are further apart. This makes it harder for businesses and consumers to get financing which can slow down economic growth. To avoid this, central banks may lower their key policy rates, making it cheaper for banks to borrow money and ideally encouraging them to lend more.

If Interest Rate Spreads Widen,central Banks May Have to ___________