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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?
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?
The RBI settles claims of other commercial banks by a process of book entries. It helps to stabilize the banking system in the economy. Which function of the Central bank is explained here.
- In the realm of economic development, how does the role of entrepreneurs impact the overall growth and stability of a nation.
The Central bank is having the authority to regulate the amount of money supply in the economy.
Based on the above explain the following.
- Credit Rationing
- CRR
- Regulation of Margin Requirements
- Bank Rate
Which of the following is/are the function(s) of central bank.
The main advantage of giving the monopoly right of note issue to the central bank is that it ______.
______ is the main function of central bank.
Identify which of the following is not the function of the central bank?
Which of the following is not a function of a commercial 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.
Identify the function of RBI as indicated by the following image.
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.
How does the central bank act as a lender as the last resort?
Mention two ways in which the Reserve Bank of India assists the commercial banks.
Explain the following function of the central bank of a country.
Developmental functions.
Name the institution that enjoys the monopoly of note issue in India.
