Question

"The Bank of Israel lowered its benchmark lending rate by half a percentage point, the fourth cut in seven weeks, as the global financial turmoil slows economic growth and inflation expectations ease." www.bloomberg 11/24/2008 The Bank of Israel's actions ________ bank reserves and have the goal of ________ consumption. Group of answer choicesA) zero unemploymentB) exchange rate stabilityC) monetary base maximizationD) price level stability

Answer 1

Hi there.

None of the answers here fit in so i would answer you to the best of my knowledge.

Answer:

Increase; increasing

Explanation:

In reducing the lending rate of banks by the Bank of Israel, bank reserves will increase as the bank's reserves as lesser amounts will be lent out. Also, consumption will increase as a result of this lowered lending rate which in itself is a goal of lending rate reduction.

By reducing the lending rate also, the thought of inflation has been taken care of as well. This helps to keep the economy financially stable as much as possible during the global financial turmoil

Cheers