Question

Which situation most likely results when the government raises interest rates to banks? A. More people invest in the stock market. B. Economic activity slows. C. The value of the currency inflates. D. The employment rate increases.

Answer 1

c.the value of the currency inflates

Answer 2

The correct answer for your question is option (c)-Economic activity slows down.

Slow down in economic activity is the result that is most likely to happen when the government raises interest rates in banks.

The slow down in economic activity will consequently result in recession. Recession is known as contraction in business cycle of a country that are more likely to happen when there is a inflation, bankruptcies and rise in unemployment rate.