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When the central bank decides to increase the discount rate, the: money supply increases. interest rates decrease. interest rates are unaffected. interest rates increase.

Respuesta :

The correct option is D). interest rates increase.

What happens when the central bank increases or reduces the discount rate?

When the central bank increases the discount rate, there will be a decrease in the amount of reserves in the banking system.

If central bank decrease the discount rate, then it will be cheaper for commercial banks to borrow money.

Basically, When the central bank decides to increase the discount rate then the interest rates increase.

Learn more about the discount rate here:-

https://brainly.com/question/13660799

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