Aggregate demand is total demand for final goods and services that all sectors of the economy are planning to buy at a given level of income during a given period of time. Aggregate demand is affected by actions of RBI. The central bank on 27th March, 2020 reduced the repo rate by a whopping 75 basis points, bringing it down to 4.4 per cent, as a response to the coronavirus-induced crisis. The repo rate thus fell to the lowest ever. Before this, it had hit the lowest point of 4.74% in April 2009 in the wake of the financial crisis of 2008. Cash reserve ratio or CRR was also cut by the RBI by 100 basis points and reduced to 3 per cent with effect from March 28. This unlocked Rs 1.37 lakh crore primary liquidity in the banking system. The reverse repo rate was also lowered by 90 basis points. This affects the aggregate demand in the economy.

What do you understand by repo rate?

Commercial banks lend money to central banks Central bank lends money to public Commercial banks lend money to public Central bank lends money to commercial banks

Central bank lends money to commercial banks

The rate at which central bank of the country(RBI in case of India) lends money to the commercial banks in case of shortfall is called as repo rate.