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Which one is not correct about Bank rate?
- a)It is a quantitative measure.
- b)It differs from repo rate.
- c)It is also known as discount rate.
- d)It influences credit availability to particular sector.
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
Which one is not correct about Bank rate?a)It is a quantitative measur...
Bank Rate
Bank Rate is the rate at which the central bank (in India, RBI) lends money to commercial banks. It is also known as the discount rate.
Quantitative Measure
Bank Rate is a quantitative measure because it is expressed in terms of a percentage. It reflects the cost of borrowing for banks and is a tool used by the central bank to control the money supply in the economy.
Difference from Repo Rate
Repo Rate is the rate at which banks borrow money from the central bank against government securities. It is a short-term instrument used for liquidity management. Bank Rate, on the other hand, is a long-term instrument used for controlling credit availability in the economy.
Also known as Discount Rate
Bank Rate is also known as the discount rate because it is the rate at which banks can borrow money from the central bank by selling their securities at a discount.
Does not influence credit availability to particular sector
Bank Rate does not influence credit availability to a particular sector because it is a general policy tool used to control the overall money supply in the economy. The central bank uses Bank Rate to signal its stance on the monetary policy and to influence the lending rates of commercial banks. The impact of Bank Rate on credit availability is indirect and depends on the response of banks to changes in the policy rate.
Conclusion
In conclusion, Bank Rate is a quantitative measure used by the central bank to control the money supply in the economy. It is different from Repo Rate and is also known as the discount rate. However, it does not directly influence credit availability to a particular sector.
Bank Rate is the rate at which the central bank (in India, RBI) lends money to commercial banks. It is also known as the discount rate.
Quantitative Measure
Bank Rate is a quantitative measure because it is expressed in terms of a percentage. It reflects the cost of borrowing for banks and is a tool used by the central bank to control the money supply in the economy.
Difference from Repo Rate
Repo Rate is the rate at which banks borrow money from the central bank against government securities. It is a short-term instrument used for liquidity management. Bank Rate, on the other hand, is a long-term instrument used for controlling credit availability in the economy.
Also known as Discount Rate
Bank Rate is also known as the discount rate because it is the rate at which banks can borrow money from the central bank by selling their securities at a discount.
Does not influence credit availability to particular sector
Bank Rate does not influence credit availability to a particular sector because it is a general policy tool used to control the overall money supply in the economy. The central bank uses Bank Rate to signal its stance on the monetary policy and to influence the lending rates of commercial banks. The impact of Bank Rate on credit availability is indirect and depends on the response of banks to changes in the policy rate.
Conclusion
In conclusion, Bank Rate is a quantitative measure used by the central bank to control the money supply in the economy. It is different from Repo Rate and is also known as the discount rate. However, it does not directly influence credit availability to a particular sector.
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Which one is not correct about Bank rate?a)It is a quantitative measure.b)It differs from repo rate.c)It is also known as discount rate.d)It influences credit availability to particular sector.Correct answer is option 'D'. Can you explain this answer?
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Which one is not correct about Bank rate?a)It is a quantitative measure.b)It differs from repo rate.c)It is also known as discount rate.d)It influences credit availability to particular sector.Correct answer is option 'D'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which one is not correct about Bank rate?a)It is a quantitative measure.b)It differs from repo rate.c)It is also known as discount rate.d)It influences credit availability to particular sector.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which one is not correct about Bank rate?a)It is a quantitative measure.b)It differs from repo rate.c)It is also known as discount rate.d)It influences credit availability to particular sector.Correct answer is option 'D'. Can you explain this answer?.
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