Question

Raising bank rate is aimed at the expansion of credit.

• A. True
• B. False

Answer 1

The correct option is B False

False.

Bank rate is the rate charged on the loans offered by the Central bank to the commercial banks without any collateral. Bank rate is a quantitative credit control measure where the bank rate is raised during inflation in order to reduce the amount of credit creation in the economy so that purchasing power can be reduced.