CAST Permanent

Practice session

Passage: The European Central Bank sets key interest rates to maintain price stability in the euro area. When inflation exceeds the 2% target, the ECB typically raises interest rates to cool economic activity. Conversely, during periods of low inflation or recession, the ECB may lower rates to stimulate borrowing and investment. Commercial banks pass these rate changes on to consumers through mortgage and loan pricing. Question: Which of the following is logically supported by the passage?

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