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प्रश्न
explain the role of Bank Rate in correcting deficient demand?
Explain the role of 'Bank Rate' in removing deficient demand?
उत्तर
Role of bank rate to adjust deficit demand
Bank rate policy is used as the main instrument of monetary control during inflation. When the central bank reduces the bank rate, it is said to have adopted a dear money policy. The decline in bank rate decreases the cost of borrowing which increases commercial banks borrowing from the central bank. Consequently, the flow of money from the commercial banks to the public gets increased. Therefore, deflation arising due to bank credit is controlled.
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संबंधित प्रश्न
Explain national income equilibrium through aggregate demand and aggregate supply. Use diagram. Also explain the changes that take place in an economy when the economy is not in equilibrium
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Fill in the blank with appropriate alternatives given below
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| Column A | Column B |
| (1) Y = AD | (a) Level of output at full employment |
| (2) Forward Multiplier | (b) Withdrawal of investment decreases income |
| (3) Paradox of Thrift | (c) People save less or same as before |
| (4) Multiplier (k) < 1 | (d) 0 < MPC < 1 |
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