CUET Preparation Today
The RBI can influence money supply by changing the rate at which it gives loans to the commercial banks. This rate is called ________ is in India. |
Repo Rate Revenue Repo Rate Bank rate Fixed Rate |
Bank rate |
The correct answer is option (3) : Bank rate "The RBI can influence money supply by changing the rate at which it gives loans to the commercial banks. This rate is called the Bank Rate in India. By increasing the bank rate, loans taken by commercial banks become more expensive; this reduces the reserves held by the commercial bank and hence decreases money supply. A fall in the bank rate can increase the money supply." |
