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प्रश्न
How is Bank rate altered to correct a depression in an economy?
How does Bank rate help in controlling the flow of credit in the economy?
How does Bank rate work as a method of credit control?
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उत्तर
The bank rate is the rate at which the central bank lends money to banks.
Bank Rate as a method of Credit Control:
Any change in bank rate affects the lending rates of commercial banks. Consequently, the cost and availability of credit also changes in the market.
- A low bank rate (in a situation of deflation) encourages the banks to keep small proportion of their deposits as reserves since borrowing from central bank is now cheaper than before. As a result banks use a greater proportion of their funds for giving out loans to the borrowers. Thus, money supply increases in the economy.
- The central bank raises the bank rate in a situation of inflation. As a result, cost of credit increases, which in turn discourages the flow of credit. As a result, money supply decreases.
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संबंधित प्रश्न
Which of the following is not a function of the Central Bank?
Assertion (A): Central bank as a banker to the government, works as a custodian of foreign exchange reserves.
Reason (R): The Central bank acts as a Clearing house for the transfer and settlement of mutual claims of commercial banks.
- In the realm of economic development, how does the role of entrepreneurs impact the overall growth and stability of a nation.
Which function of RBI is indicated by the above image?
Central bank is the ______ of the country's foreign currency reserves.
Which of the following is/are the function(s) of central bank.
Give two major functions of the central bank of our country.
Explain the 'Clearing House Function' of the central bank.
The central bank acts as ______.
Which of the following statements are true?
- The Reserve Bank of India is the central bank of the country.
- All currency notes (except one rupee note) bear the signature of Governor, RBI.
- The objective of the Reserve Bank of India is to earn profit.
Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Central Bank acts as a banker to the Government.
Reason (R): Except the one rupee note, all other currency notes bear the signature of Governor of RBI.
Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Reserve Bank of India creates credit.
Reason (R): Reserve Bank of India is known as a bank of note issue.
Give two reasons why the central banks enjoy monopoly of note issue.
Explain the following function of the central bank of a country.
Developmental functions.
