[Answer] What generally happens when a central bank unexpectedly increases interest rates? (D)

Answer: a)The currency weakens then strengthens. b)The currency strengthens then weakens. c)The currency weakensd)The currency strengthens
What generally happens when a central bank unexpectedly increases interest rates? (D)

Monetary policy concerns the actions of a central bank or other regulatory authorities that determine the size and rate of growth of the money supply.For example in the United States the Federal Reserve is in charge of monetary policy and implements it primarily by performing operations that influence short-term interest rates .

A typical central bank has several interest rates or monetary policy tools it can set to influence markets. Marginal lending rate – a fixed rate for institutions to borrow money from the central bank . (In the USA this is called the discount rate). Main refinancing rate – the publicly visible interest rate the central bank …

Open market operation – Wikipedia

Interest rate – Wikipedia

Real interest rate – Wikipedia

Interest rate – Wikipedia

The Austrian business cycle theory (ABCT) is an economic theory developed by the Austrian School of economics about how business cycles occur. The theory views business cycles as the consequence of excessive growth in bank credit due to artificially low interest rates set by a central bank or fractional reserve banks . The Austrian business cycle theory originated in the work of Austrian School …

Sun Feb 18 2001 13:30:00 GMT-0500 (Eastern Standard Time) · When inflation beyond an acceptable level is taking place the country’s central bank can increase the interest rate which typically will tend to slow or stop the growth of the money supply. Some central banks have a symmetrical inflation target while others only control inflation when it rises above a threshold whether publicly disclosed or not.

Standard central bank monetary policies are usually enacted by buying or selling government bonds on the open market to reach a desired target for the interbank interest rate.However if a recession or depression continues even when a central ban…

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