ECC04 — Money, Banking and Inflation

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Question 1

If the RBI increases the Repo Rate, the expected impact is: (CDS PYQ)

AMoney supply increases, leading to higher inflation

BCost of borrowing falls, stimulating more investment

CCost of borrowing rises, helping to control inflation

DBanks reduce their lending rates for retail customers

Question 2

If RBI increases CRR, the effect on the banking system is: (CDS PYQ)

ABanks have more funds to lend, expanding money supply

BBanks must keep more cash with RBI, reducing lendable resources

CBanks earn higher interest on their CRR balances

DGovernment borrowing capacity automatically increases

Question 3

Which measure best captures inflation at the consumer/retail level? (CDS PYQ)

AWholesale Price Index (WPI)

BConsumer Price Index (CPI)

CGDP Deflator

DProducer Price Index (PPI)

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ECC04 — Money, Banking and Inflation — Quiz