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

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The term 'Repo Rate' refers to the rate at which:

A. Government borrows from RBI

B. Commercial banks lend to RBI

C. RBI lends to commercial banks against securities

D. RBI borrows from commercial banks

Answer: Option C

Solution (By JKSSB Mock Tests)

Repo rate is the rate at which the Reserve Bank of India lends money to commercial banks against government securities for short-term needs.

This question belongs to: Economy GK Economy Set 1

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Question #1

The 'Goods and Services Tax' was first introduced in India through which amendment?

A. 101st Constitutional Amendment

B. 100th Constitutional Amendment

C. 99th Constitutional Amendment

D. 102nd Constitutional Amendment

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Correct Answer: Option A

Explanation:
GST was introduced through the 101st Constitutional Amendment Act, 2016.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Special Drawing Rights' allocated by IMF are recorded in which part of a country's balance of payments?

A. Visible trade

B. Current account

C. Invisibles

D. Capital account or reserve assets

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Correct Answer: Option D

Explanation:
SDR allocations are recorded as reserve assets in the balance of payments.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is a feature of the 'Uncovered Interest Parity' puzzle or forward-premium puzzle?

A. High-interest currencies always depreciate as predicted

B. Forward rates are perfect predictors of future spot rates

C. Interest differentials are always zero

D. High-interest currencies tend to appreciate rather than depreciate as uncovered interest parity would predict

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Correct Answer: Option D

Explanation:
Empirical evidence often shows that currencies with high interest rates tend to appreciate, contrary to the prediction of uncovered interest parity that they should depreciate; this is known as the forward-premium puzzle.

This question belongs to: Economy GK Economy Set 1

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