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Home Questions DVGZQ53BT4
Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Money and Banking

Question:

Match List - I with List - II.

List – I    List – II
Banking    Function
(A) Commercial Bank    (I) Long term lending rate by RBI
(B) Reserve Bank of India    (II) Short term lending rate by RBI
(C) Bank Rate   (III) Credit creation
(D) Repo Rate   (IV) Lender of last resort

Choose the correct answer from the options given below:

Options:

(A) - (IV), (B) - (III), (C) - (I), (D) - (II)   

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

(A) - (III), (B) - (IV), (C) - (II), (D) - (I)   

(A) - (IV), (B) - (III), (C) - (II), (D) - (I)

Correct Answer:

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Explanation:

Commercial bank helps in the credit creating of money, whereas, RBI i.e. Reserve Bank of India acts as custodian of cash reserve, provides centralized clearing, and is the lender of last resort. Bank rate is the lending rate at which commercial banks can borrow from the RBI without providing any security. Whereas, the repo rate is the rate of interest charged by the central bank to commercial banks for a short period.

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