RBI is the father of all government and private sector banks and financial institutions in India. All financial activities are done under the supervision of the RBI (Reserve Bank of India). Today, we have come to provide the most important general knowledge questions based on the RBI Repo Rate. Now you are thinking what the RBI Repo Rate and its related facts are.
What is the RBI Repo Rate?
What is the RBI Repo Rate? The RBI’s repo rate is the interest rate at which the
Reserve Bank of India (RBI) lends short-term funds to commercial banks against government securities. In simple language, we narrate that the Repo Rate is when the RBI Give the money to Banks or any financial institution on the basis of interest rate and in return keeps the same security bonds.
RBI Repo Rate Quiz
To help the aspirants, we have added the most important and relevant questions based on the RBI Repo Rates. The banking and financial companies have trust in the RBI and follow all instructions provided by the RBI. Follow the questions below and answer the RBI Repo rate quiz questions.
RBI Repo Rate GK Quiz
Here are 25 most important objective questions with answers on the topic “RBI Repo Rate” for banking exams:
Question 1: What is the RBI Repo Rate?
A) The rate at which RBI lends money to the government
B) The rate at which RBI borrows money from banks
C) The rate at which RBI lends money to commercial banks
D) The rate at which banks lend money to each other
Answer: C
Question 2: When RBI increases the repo rate, it generally leads to:
A) Increase in inflation
B) Decrease in borrowing costs
C) Increase in borrowing costs for banks
D) No change in interest rates
Answer: C
Question 3: What impact does a decrease in the repo rate have on the economy?
A) Encourages borrowing and investment
B) Discourages borrowing
C) Leads to higher inflation immediately
D) Strengthens the currency instantly
Answer: A
Question 4: Which of the following is the correct full form of REPO?
A) Repurchase Option
B) Repayment Option
C) Repurchase Agreement
D) Repayment Agreement
Answer: C
Question 5: Which monetary policy tool is the RBI Repo Rate classified as?
A) Quantitative Tool
B) Qualitative Tool
C) Open Market Operation
D) Liquidity Adjustment Facility (LAF)
Answer: D
Question 6: A higher repo rate generally results in:
A) Lower cost of loans for customers
B) Higher cost of loans for customers
C) No effect on loan rates
D) Increase in government spending
Answer: B
Question 7: The RBI uses repo rate to:
A) Control inflation
B) Control currency circulation
C) Regulate credit conditions
D) All of the above
Answer: D
Question 8: When RBI reduces the repo rate, what happens to bank interest rates?
A) They remain fixed
B) They generally decrease
C) They increase
D) They fluctuate randomly
Answer: B
Question 9: Who decides the RBI repo rate?
A) Indian Parliament
B) Reserve Bank of India Governor
C) Monetary Policy Committee (MPC)
D) Finance Ministry
Answer: C
Question 10: How frequently does the Monetary Policy Committee review the repo rate?
A) Annually
B) Quarterly
C) Monthly
D) Biannually
Answer: B
Question 11: Repo rate affects which of the following the most?
A) Government expenditure
B) Banks’ cost of funds
C) Foreign exchange reserves
D) Fiscal deficit
Answer: B
Question 12: What happens when the repo rate is set very high?
A) Banks borrow more from RBI
B) Inflation tends to rise sharply
C) Borrowing by banks decreases
D) Banks lend more freely
Answer: C
Question 13: The repo rate is linked to which of these rates?
A) Bank rate
B) Reverse repo rate
C) Prime lending rate
D) All of the above
Answer: D
Question 14: Reverse repo rate is:
A) The rate at which RBI lends to banks
B) The rate at which RBI borrows from banks
C) Same as repo rate
D) None of these
Answer: B
Question 15: Repo rate changes impact which economic indicators?
A) Inflation and growth
B) Employment and trade deficit
C) Fiscal deficit only
D) Currency exchange only
Answer: A
Question 16: What usually triggers RBI to increase the repo rate?
A) Economic slowdown
B) Rising inflation
C) Lower government borrowing
D) Decrease in foreign investment
Answer: B
Question 17: What does a stable repo rate indicate?
A) Stable inflation and growth expectations
B) High inflation
C) Economic recession
D) Currency depreciation
Answer: A
Question 18: Which sector is directly affected by repo rate changes?
A) Agriculture
B) Banking and Finance
C) Manufacturing only
D) Foreign trade only
Answer: B
Question 19: RBI repo rate influences which of the following rates the quickest?
A) Fixed deposit rates
B) Home loan interest rates
C) Car loan interest rates
D) All bank loan rates broadly
Answer: D
Question 20: How does an increase in repo rate influence savings?
A) Savings tend to decrease
B) Savings tend to increase due to higher deposit rates
C) No effect on savings
D) Discourages saving
Answer: B
Question 21: The tool used by RBI involving repo rate is to:
A) Increase money supply only
B) Decrease money supply only
C) Manage liquidity in the banking system
D) Control foreign exchange rates
Answer: C
Question 22: When RBI lowers the repo rate, what is the likely immediate effect on the rupee?
A) Rupee appreciates
B) Rupee depreciates
C) No change in rupee value
D) Rupee becomes unstable
Answer: B
Question 23: What type of loan does repo rate affect the most?
A) Personal loans
B) Short-term loans to banks
C) Agricultural loans only
D) Vehicle loans only
Answer: B
Question 24: The repo rate is an instrument primarily used for:
A) Fiscal policy
B) Monetary policy
C) Trade policy
D) Investment policy
Answer: B
Question 25: The repo rate is announced by:
A) Finance Minister of India
B) Monetary Policy Committee of RBI
C) Prime Minister of India
D) Planning Commission of India
Answer: B