Question

The GDP of a country hasnt improved in the past three years. The central bank decided to take a measure that will increase the amount of
money people spend on goods and services. Which step should the central bank take?
A increase interest rates
OB
reduce interest rates
oc
increase taxes
OD
increase the required reserve ratio
OE increase the price of goods and services

Answer 1

The correct answer is B. Reduce interest rates

Explanation:

The GDP or gross domestic product is measured based on the amount of money products and services produced by a country cost. This concept is related to the amount of money people in a country spend on goods and services. Additionally, one of the ways to increase the GDP by motivating people to spend more money is if interest rates are reduced because if the interest rate is low (money people need to pay for a loan) consumers are more likely to request loans and use the money of these on goods and services. This increases the amount of services and goods and therefore has a positive impact on the GDP.