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    • Question

      What is the primary purpose of the Reserve Bank of India

      (RBI) setting the repo rate?
      A To determine the rate at which banks lend to their customers Correct Answer Incorrect Answer
      B To control inflation by regulating the money supply Correct Answer Incorrect Answer
      C To set the minimum lending rate for banks Correct Answer Incorrect Answer
      D To influence the currency exchange rate Correct Answer Incorrect Answer
      E To regulate the credit risk of banks Correct Answer Incorrect Answer

      Solution

      The repo rate is the rate at which commercial banks borrow money from the RBI. A higher repo rate typically reduces inflation by discouraging borrowing and increasing the cost of money in the economy.

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