Concept:The bank rate is the interest rate at which the central bank lends money to commercial banks.
A change in this rate directly affects the cost and level of borrowing in the whole economy.
Explanation:When the central bank increases the bank rate, borrowing from the central bank becomes more expensive for commercial banks.
These commercial banks, in turn, raise the interest rates they charge to their own customers.
Higher interest rates make loans more costly for individuals and businesses.
As a result, fewer people are willing or able to borrow money from financial institutions.
Therefore, the total amount of borrowing in the economy decreases.
This action is usually taken to control inflation and reduce excess money supply.
An increase in the bank rate does not cause borrowing to rise, nor does it leave commercial banks unaffected.
Answer:B. Amount of borrowing decreases