An increase in the Bank Rate generally indicates that the:

UPSC Prelims 2013 Economy

Explanation

Bank rate is the rate charged by the central bank for lending funds to commercial banks. To curb liquidity, the central bank can resort to raising the bank rate and vice versa. An increase in rate points toward a tight money policy is being followed by the RBI.

Linked concepts

Revision pages for syllabus ideas tested in this PYQ.

Exchange Rate Management and its Economic Implications

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