Macro

Money & Banking

Easy

Which of the following action by RBI leads to an increase in the supply of money in the economy:

Increase in bank rate

Decrease in bank rate

Increase in statutory liquid ratio.

Increase in repo rate

✅ Correct Option: 2

A decrease in the bank rate makes borrowing from the RBI cheaper for commercial banks, encouraging them to lend more, which expands credit creation and increases money supply. Raising the bank rate, SLR or repo rate would all contract money supply.

2023: 30 May Shift 1

The ratio of money held by the public in currency to that held as deposits in commercial banks is called .

2025: 13 May Shift 2

How much total credit creation can bank creates with Cash Reserve Rato of 20% when bank's reserves are Rs. 1000.

2025: 29 May Shift 1

During deficient demand, RBI __________ the margin.

2026: 21 May Shift 1

Match List-I with List-II

List-I	List-II
(A) Lender of last resort	(I) 1/Cash reserve ratio
(B) Money multiplier	(II) Buying and selling government securities
(C) Open market operations	(III) RBI
(D) $M^d_t$ = kPY	(IV) Transaction demand for money is positively related to the real income of an economy.

Choose the correct answer from the options given below:

2025: 3 June Shift 2

The Reserve Bank of India publishes four measures of money supply. Which one of the measures is the least liquid in them?

2025: 31 May Shift 1

Why does central bank is called the lender of last resort?

It lends money to the government to finance its budget deficit.
Central bank lends money to trade and industry to support their export operations.
When a country runs out of money, the central bank prints more money.
Central bank lends money to banks at all times.

Which of the following action by RBI leads to an increase in the supply of money in the economy:

Solution

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