--%>

Define bank rate policy

Define bank rate policy? How does it operate as a technique of credit control?

Answer: Bank rate is the rate at which the central bank provides loans to the commercial banks. The increase in bank rate leads to rise in interest of loans. This discourages borrowers from taking loans. This reduces credit creation. The decrease in bank rate will have opposite effect.

   Related Questions in Macroeconomics

  • Q : Agency function of Commercial Bank Name

    Name the six agency function of Commercial Bank. Answer: A) Transfer of funds B) Collection of funds C) Purchase and sale of securities. D) Collection of dividends E) Payment of bills &

  • Q : Value of MPC Why can be value of MPC be

    Why can be value of MPC be not more than one? Answer: The value of MPC will not be more than one since increment in consumption (ΔC) can’t be more than

  • Q : What is Bank rate Bank rate : This is

    Bank rate: This is the rate at which the central bank loans money to commercial bank.

  • Q : Equilibrium of a market How can

    How can Equilibrium of a market be exist?

  • Q : Supply use two market diagrams to

    use two market diagrams to explain how an increase in state subsidies to public colleges might affect tuition and enrollments in both public and private colleges?

  • Q : Explain Tax rate increase. A change in

    A change in tax rate changes the IS equation, LM equation remaining the same. Let same, let us suppose that the government raises the tax rate from 20 percent to 25 percent<

  • Q : Are government budget scarcities always

    ‘The country is at present in recession and this has led to worse tax revenue and high expenses. The effect is a huge deficit. The government decides to increase taxes and lower government expenses. Is this an excellent idea?’

  • Q : Determinants of transaction demand.

    With the help of graph discuss the determinants of transaction demand.

  • Q : Limitations of using GDP as an index of

    What are the limitations of using GDP as an index of welfare of a country?A) The N.I. figures provide no indication of the population, skill and resource of the country. Thus the levels of welfare stay low.B) A higher N.I. migh

  • Q : Ideas in which organization is involved

    Ideas in which organization is involved: Talking about the growth of any company. There are basically three type of broad ideas in which management of any organization is involved. These are: 1. Corporate Strategy<