Question

Cut in Repo rate by RBI is likely to ______ the demand for goods and services in the economy.

Options

• Increase

• Decrease

• Either Increase or Decrease

• Neither Increase nor Decrease

Answer 1

Cut in Repo rate by RBI is likely to Increase the demand for goods and services in the economy.

Explanation:

To address the lack of demand, the RBI will lower the repo rate. As a result, banks will lower lending rates, resulting in increased demand for loans. This will raise the money supply and address the insufficient demand condition.