Download App

Money and Banking — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsMoney and Banking4 Marks
Question
Explain how 'Repo Rate' can be helpful in controlling credit creation.
✓

Answer

Repo Rate: Is the rate of interest at which central bank lends money to commercial bank for short period.
Raising Repo Rate makes borrowing by commercial banks costlier. So these banks are forced to raise their lending rates. Since borrowing becomes costly for people, they borrow less. Banks, therefore, create less credit.

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Explore more

More "4 Marks Question" from Money and Banking→Money and Banking — all question types→Economics STD 12 Humanities & Commerce question papers→Rajasthan Board STD 12 Humanities & Commerce question papers→Rajasthan Board question paper generator→

Similar questions

Describe the evolution of money.
→
Distinguish between:
  1. Capital expenditure and Revenue expenditure
  2. Fiscal deficit and Primary deficit
→
Explain how can government budget be useful in influencing allocation of resources in an economy.
→
Explain the components of aggregate demand.OR
State components of AD. Describe any one.
→
Calculate investment expenditure from the following data about an economy which is in equilibrium:
National Income = ₹ 1,000
Marginal Propensity to Save = 0.20
Autonomous consumption expenditure = ₹ 100
→
Show how the sum of net value added is equal to the sum of factor incomes. OR
$NVA_{FC} =$ Income generated. Discuss.
→
Explain the role of "open market operations" in reducing money supply.OR
What are open market operations? How do these affect availability of credit?OR
How does a central bank influence credit creation by commercial banks by open market operations? Explain.
→
Explain the role of Reverse Repo Rate in controlling credit creation.
→
From the following data about a Government budget, find out (a) Revenue deficit, (b) Fiscal deficit and (c) Primary deficit:
    (Rs. Arab)
(i)
Capital receipts net of borrowings
95
(ii)
Revenue expenditure
100
(iii)
Interest payments
10
(iv)
Revenue receipts
80
(v)
Capital expenditure
110
→
Give meaning of money. Explain the ‘store of value’ function of money.
→