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Question
The rate of which commercial banks borrow from the Central Bank is the:
Options
Bank rate
Deposit rate
Lending rate
None of these
Solution
Bank rate
Explanation:
The bank rate is the rate at which commercial banks borrow from the central bank. It is defined as "the rate at which the central bank is ready to rediscount the first-class securities and bills presented before it by the commercial banks." Central banks employ the bank rate as a monetary policy tool to influence the economy.
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