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    Question

    When the RBI increases the "Repo Rate," it generally

    leads to:
    A Lowering of interest rates by commercial banks. Correct Answer Incorrect Answer
    B Increase in the money supply in the economy. Correct Answer Incorrect Answer
    C Higher borrowing costs for commercial banks and consumers. Correct Answer Incorrect Answer
    D Decrease in the value of the Rupee. Correct Answer Incorrect Answer
    E Immediate increase in the stock market. Correct Answer Incorrect Answer

    Solution

    Repo rate is the rate at which RBI lends to banks. Increasing it is a contractionary measure to control inflation.

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