Federal Reserve raises benchmark interest rate to confront stubborn inflation

Study the questions and tasks

Work through the material below, or start the interactive practice above to complete an attempt. Try the exercises before opening any answer or transcript sections, then use them to review your work.

Practice level

C1. Try this level if you can follow the instructions and understand most of the language; choose an earlier level if you need more support.

Question formats

Single choice

How to approach this practice

Read the passage for its main idea, then return to the relevant sentence or paragraph for each question. Base answers on the passage.

1. Question 1 · Single choice

   Choose one answer.

   What is the article’s central purpose?

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   1. To compare competing central banks’ policies
   2. To explain a rate increase and its consumer implications
   3. To assess lenders’ individual adjustment strategies
   4. To predict the exact future path of inflation
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   Answer

   To explain a rate increase and its consumer implications

   It connects a policy decision with its practical consequences for consumers.

   The announcement links the central bank’s inflation response to a familiar financial reality: the price of access to borrowed money can affect everyday decisions.

2. Question 2 · Single choice

   Choose one answer.

   What does “Its importance” refer to in the second paragraph?

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   1. The cost of borrowing
   2. The central bank
   3. The decision
   4. The reference point
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   Answer

   The decision

   The pronoun refers to the preceding decision and its practical significance.

   Its importance lies in the connection between a central bank’s response to inflation and the financial choices faced by consumers.

3. Question 3 · Single choice

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   Why does the article call the decision more than a technical adjustment?

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   1. It changes the central bank’s legal authority
   2. It directly determines every lender’s terms
   3. It influences consumer financial behavior
   4. It provides details about household incomes
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   Answer

   It influences consumer financial behavior

   It may influence both purchases and people’s management of existing debt.

   Raising the benchmark rate is consequently not an isolated technical adjustment: it is a policy decision that can influence how consumers approach purchases and existing debt.

4. Question 4 · Single choice

   Choose one answer.

   How is the article organized overall?

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   1. Chronologically, from past rates to future forecasts
   2. By presenting the announcement, effects, tensions, and limits
   3. By comparing two unrelated economic instruments
   4. By listing lenders and ranking their responses
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   Answer

   By presenting the announcement, effects, tensions, and limits

   It moves from the announcement to mechanisms, examples, tensions, and limitations.

   The rate increase illustrates a difficult policy balance.

5. Question 5 · Single choice

   Choose one answer.

   What relationship does the article establish between inflation and borrowing costs?

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   1. Fighting inflation necessarily lowers borrowing costs
   2. Higher borrowing costs directly cause persistent inflation
   3. An anti-inflation policy may make credit more expensive
   4. Borrowing costs have no connection with monetary policy
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   Answer

   An anti-inflation policy may make credit more expensive

   The central bank’s anti-inflation response can raise the cost of credit.

   The decision was intended to combat stubborn inflation, according to the available source.

6. Question 6 · Single choice

   Choose one answer.

   What can reasonably be inferred about individual lenders?

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   1. They must all change terms identically
   2. Their precise responses remain unspecified
   3. They will immediately stop issuing credit
   4. They are excluded from monetary policy effects
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   Answer

   Their precise responses remain unspecified

   The article warns that lender responses are not fully specified.

   The source specifically identifies these two consumer effects; it does not provide further details about how individual lenders will adjust their terms.

7. Question 7 · Single choice

   Choose one answer.

   Which statement best captures the article’s concluding emphasis?

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   1. The increase’s exact size is fully documented
   2. The policy affects only financial institutions
   3. Access to borrowed money has everyday costs
   4. Consumers will stop using credit entirely
   Check answers and explanations

   Answer

   Access to borrowed money has everyday costs

   The conclusion foregrounds how credit prices shape everyday choices.

   For consumers, the clearest implication is that borrowing for a vehicle or carrying credit-card debt may become more costly.

What to review next

Find the words that support each answer. For a mistake, compare the question with the evidence and identify the detail or inference you missed.

A focused practice result shows how you did on these tasks. Use several activities across skills to decide what to study next; one practice score does not certify an overall CEFR level.

Before you practise: a worked example

Look for evidence in the text. Separate what the writer says from what you already know about the topic.

The library normally closes at six, but on Fridays it stays open until eight. When does it close on Friday?

The answer is eight. But introduces an exception to the normal closing time, so the first time mentioned is not the answer.

This teaching example is separate from the scored questions. After your test, compare any mistakes with the explanation and revisit the topic before trying again.