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Question
To control credit in economy RBI ________ bank rate.
To control credit in economy RBI ________ bank rate.
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Solution
The correct option is B increases
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 under the monetary policy of the government as it controls the overall
supply of the money in the economy. During inflation, bank rate is increased by the Reserve Bank of India(RBI) which is the central bank of India in order to
reduce the amount of credit creation by the commercial banks by reducing the total deposits with the commercial banks.
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 under the monetary policy of the government as it controls the overall supply of the money in the economy. During inflation, bank rate is increased by the Reserve Bank of India(RBI) which is the central bank of India in order to reduce the amount of credit creation by the commercial banks by reducing the total deposits with the commercial banks.
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