My Learning Cart

What does a decrease in the repo rate by the RBI typically indicate?

Practice Questions

Q1
What does a decrease in the repo rate by the RBI typically indicate?
  1. Tighter monetary policy
  2. Easier monetary policy
  3. Increase in inflation
  4. Decrease in bank lending

Questions & Step-by-Step Solutions

What does a decrease in the repo rate by the RBI typically indicate?
  • Step 1: Understand what the repo rate is. The repo rate is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks.
  • Step 2: Recognize that a decrease in the repo rate means that it is cheaper for banks to borrow money from the RBI.
  • Step 3: Realize that when banks can borrow money at a lower cost, they are more likely to lend money to businesses and individuals.
  • Step 4: Understand that when banks lend more money, it can lead to increased spending and investment in the economy.
  • Step 5: Conclude that a decrease in the repo rate typically indicates an easier monetary policy, which aims to stimulate economic growth.
No concepts available.
Soulshift Feedback ×

On a scale of 0–10, how likely are you to recommend The Soulshift Academy?

Not likely Very likely