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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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