The term 'Reverse Repo Rate' is used by the RBI to: MCQ with Answer and Explanation

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The term 'Reverse Repo Rate' is used by the RBI to:

A. Absorb excess liquidity from the banking system

B. Inject liquidity into the system

C. Determine the fiscal deficit

D. Fix the long-term interest rates only

Answer: Option A

Solution (By JKSSB Mock Tests)

Under the reverse repo window, the RBI absorbs excess liquidity from banks by borrowing funds from them at the reverse repo rate.

This question belongs to: Economy GK Economy Set 1

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Practice More Economy Set 1 Questions

Question #1

Deficit financing means:

A. financing government expenditure through borrowing or money creation

B. repayment of public debt

C. financing government expenditure through taxation

D. reducing government expenditure

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Correct Answer: Option A

Explanation:
Deficit financing involves financing a budget deficit through borrowing or creation of money.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'Goods and Services Tax' on port services is:

A. 5%

B. 12%

C. 18%

D. 28%

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Correct Answer: Option C

Explanation:
Port services attract 18% GST.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is a characteristic of oligopoly?

A. Large number of independent sellers

B. Interdependence among firms

C. Perfect information and no barriers

D. Homogeneous product with free entry

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Correct Answer: Option B

Explanation:
Oligopoly is characterised by a few firms that are interdependent in their decision-making, as the actions of one firm affect the others.

This question belongs to: Economy GK Economy Set 1

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