CELPIP Practice · Question
A news report discusses a recent decision by the Bank of Canada to raise its benchmark interest rate. What is the most likely immediate impact of this decision?
When the Bank of Canada raises its benchmark interest rate, commercial banks typically increase their interest rates on loans and savings, leading to higher ret
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Question: A news report discusses a recent decision by the Bank of Canada to raise its benchmark interest rate. What is the most likely immediate impact of this decision?
Answer options:
- Lower mortgage rates for homeowners. ✅ Higher returns on savings accounts.
- Decreased cost of borrowing for businesses.
- Increased consumer spending due to lower prices.
Correct answer: Higher returns on savings accounts.
Explanation: When the Bank of Canada raises its benchmark interest rate, commercial banks typically increase their interest rates on loans and savings, leading to higher returns for savers. This is a common topic in Canadian financial news.
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