Concept:A higher bank rate raises the cost of borrowing in the economy.Explanation:When the central bank increases the bank rate, commercial banks have to pay more to borrow from the central bank.Banks pass on this higher cost to their customers by raising interest rates on loans.As a result, borrowing becomes expensive for individuals and firms.This discourages borrowing and reduces the amount of money circulating in the economy.So the correct effect is that borrowing is discouraged.Answer:A. borrowing is discouraged