The 'repo rate' in India is the rate at which RBI lends to banks for: MCQ with Answer and Explanation

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The 'repo rate' in India is the rate at which RBI lends to banks for:

A. unsecured overnight loans

B. long-term capital

C. short-term funds against government securities

D. foreign exchange

Answer: Option C

Solution (By JKSSB Mock Tests)

Repo rate is the rate at which RBI lends short-term funds to banks against government securities.

This question belongs to: Economy GK Economy Set 1

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Practice More Economy Set 1 Questions

Question #1

Which of the following is NOT a function of the Reserve Bank of India?

A. Formulating fiscal policy

B. Acting as banker to the government

C. Issuing currency notes

D. Controlling credit

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Correct Answer: Option A

Explanation:
Fiscal policy is formulated by the government (Ministry of Finance). RBI is responsible for monetary policy, currency issue, banker to government and credit control.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'indirect tax' includes which of the following?

A. Income tax

B. Wealth tax

C. GST and excise duty

D. Corporate tax

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Correct Answer: Option C

Explanation:
GST and excise duty are indirect taxes.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'repo' in monetary policy means the RBI:

A. sells securities to banks and agrees to repurchase them later

B. gives unsecured loans to banks

C. borrows from foreign central banks

D. purchases securities from banks with an agreement to sell them back later

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Correct Answer: Option D

Explanation:
In a repo, the RBI purchases securities from banks with an agreement to resell them later, injecting liquidity.

This question belongs to: Economy GK Economy Set 1

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