Q. With reference to the Indian Economy, consider the following statements:
1.Repo rate is the rate at which the central bank of a country borrows money from commercial banks within the country
2.Variable rate reverse repo (VRRR) is usually undertaken to reduce surplus liquidity by withdrawing existing cash in the system.
Select the correct statements using the codes given below:
Answer: B
Notes:
Explanation –
Statement 1 is incorrect. Repo rate is the rate at which the central bank lends money to commercial banks against government securities or other approved collateral.
Statement 2 is correct. VRRR is usually undertaken to reduce surplus liquidity by withdrawing existing cash in the system.
Source: ForumIAS
