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UPSC 2011: The lowering of Bank Rate by the Reserve Bank of India leads to
(a)More liquidity in the market
(b)Less liquidity in the market
(c)No change in the liquidity in the market
(d)Mobilization of more deposits by commercial banks
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Not attemptedCorrect Answer: (a) More liquidity in the market
The Bank Rate/discount rate is the rate at which the central bank lends to commercial banks; cutting it lowers banks’ cost of funds, encourages borrowing and credit creation, and therefore injects additional money into the system, increasing market liquidity. ([investopedia.com](https://www.investopedia.com/terms/b/bankrate.asp?utm_source=openai))
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What is the correct answer to this UPSC 2011 Indian Economy question?▼
The correct answer is option (a): More liquidity in the market. Watch the detailed video explanation in our Sherlocking Prelims course on UnlockIAS.
Which year was this Monetary Policy & Money Supply question asked in UPSC Prelims?▼
This question was asked in UPSC CSE Prelims 2011, GS Paper 1, as Question 88. It falls under Indian Economy > Monetary Policy & Money Supply.
What is the difficulty level of this UPSC question?▼
This question is rated "easy". It tests basic recall and most well-prepared aspirants should answer it correctly.
How many UPSC Prelims questions have been asked from Monetary Policy & Money Supply?▼
UPSC has asked 27 questions from Monetary Policy & Money Supply (under Indian Economy) across multiple years. Visit the topic page to see the full list and year-wise trends.