✓ Board-verified
Economics · 2023 · 4 marks
CBSE 2023 · Region 1 · Set 1 · Q14
Read the following news published on September 26, 2022: “The central bank has increased the benchmark lending rate by 140 basis points.” Identify…
Read the following news published on September $\displaystyle 26$, $\displaystyle 2022$ :“The central bank has increased the benchmark lending rate by $\displaystyle 140$ basis points.”Identify the likely cause and consequences behind this action taken by the Reserve Bank of India.
Marking-scheme solution
Inflation in the economy may be the cause behind the rise in the benchmark lending rate by the Central bank.
This step may force the commercial banks to increase the cost of borrowing for the general public. It may discourage the general public from taking loans.
As a result, it may lead to fall in Aggregate Demand and subsequent fall in inflation.
More from Money and Banking
- Read the following information carefully: “The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), recently increased the Repo Rate…2023
- Identify, which of the following is not a function of the Reserve Bank of India. (Choose the correct alternative)2023
- “An increase in the credit creation capacity of commercial banks has a direct impact on the money supply in an economy.” Discuss the given statement.2024
- The rate at which commercial banks borrow from the Reserve Bank of India to meet their long term requirements is known as. (Choose the correct…2023
- Suppose, for a hypothetical economy, Reserve Ratio (RR) decreases from 25% to 20%, the total deposits would to ₹, if primary deposits are ₹ 1,000.…2026
- Read the following statements carefully: Statement 1: Primary deposits are the cash deposits by general public with commercial banks. Statement 2:…2023
- releases data of money supply in India. (Choose the correct option to fill in the blank)2025
- Central Bank can decrease the money supply in the economy by. (Choose the correct option to fill in the blank)2025
CBSE Class 12 Economics past-paper question from the 2023 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.