Q. Which one the following tool is used by the Reserve Bank of India (RBI) to influence borrowing costs in response to inflation?

[A] The Cash Reserve Ratio

[B] The Statutory Liquidity Ratio

[C] The Repo Rate

[D] The Marginal Standing Facility Rate

Answer: C
Notes:

Explanation – The Repo Rate is the primary tool used by the Reserve Bank of India (RBI) to influence borrowing costs and control inflation. By adjusting the repo rate, which is the rate at which the RBI lends money to commercial banks, the central bank can directly impact lending rates in the economy.

Source: The Hindu

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