A decrease in the overnight loans rate leads to

Question

Quizplus · Accepted Answer

A decrease in the overnight loans rate typically leads to an increase in the supply of money because lower interest rates make borrowing cheaper, encouraging banks to lend more. This can also lead to a depreciation in the exchange rate, as lower interest rates make a country's financial assets less attractive to foreign investors, reducing demand for the currency. A weaker currency makes exports cheaper and more competitive abroad, potentially increasing exports. Additionally, lower interest rates reduce the cost of borrowing for consumers, leading to an increase in consumer spending. Therefore, all of the statements are correct consequences of a decrease in the overnight loans rate.

A Decrease in the Overnight Loans Rate Leads to