Consequences of increase in Bank Rate - General Economics & Indian Economy
Q. Increase in Bank Rate -
a) increases the cost of borrowing by commercial banks
b) declines the supply of money
c) shows tightening of RBI monetary policy
d) all the above- Published on 06 Jun 15a. increases the cost of borrowing by commercial banks
b. declines the supply of money
c. shows tightening of RBI monetary policy
d. all the above
ANSWER: all the above
Bank rate is the rate at which a central bank is ready to buy or rediscount bills of exchange or other commercial papers. It also signals the medium-term stance of monetary policy. When bank rate is raised, it is expected that all interest rates will move together in the same direction.
