The term 'Repo Rate' is the rate at which: MCQ with Answer and Explanation

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The term 'Repo Rate' is the rate at which:

A. Government borrows from the public

B. RBI borrows from commercial banks

C. Banks lend to each other in the call market

D. Commercial banks borrow from the RBI against collateral of government securities

Answer: Option D

Solution (By JKSSB Mock Tests)

Repo rate is the interest rate at which the RBI lends short-term funds to commercial banks against the collateral of government securities under the Liquidity Adjustment Facility.

This question belongs to: Economy GK Economy Set 1

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Question #1

Which of the following is NOT a feature of perfect competition?

A. Product differentiation

B. Homogeneous product

C. Free entry and exit

D. Large number of buyers and sellers

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Correct Answer: Option A

Explanation:
Product differentiation is a feature of monopolistic competition, not perfect competition. In perfect competition, products are homogeneous.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Phillips curve' in the long run is generally considered to be:

A. horizontal

B. vertical at the natural rate of unemployment

C. downward sloping

D. upward sloping

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Correct Answer: Option B

Explanation:
The long-run Phillips curve is vertical, implying no permanent trade-off between inflation and unemployment.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is a feature of the 'Impossible Trinity' in open economy macroeconomics?

A. Only fiscal policy is constrained

B. All three objectives are always compatible

C. A country can simultaneously maintain a fixed exchange rate, free capital mobility and independent monetary policy

D. A country can achieve only two of the three: fixed exchange rate, free capital flows and monetary independence

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Correct Answer: Option D

Explanation:
The impossible trinity (or trilemma) states that it is impossible for a country to maintain a fixed exchange rate, free capital mobility and an independent monetary policy at the same time.

This question belongs to: Economy GK Economy Set 1

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