Question : The interest rate at which a nation's central bank lends money to domestic banks often in the form of very short-term loans - is referred to as:
Option 1: Bank rate
Option 2: Repo rate
Option 3: Reverse repo rate
Option 4: Cash rate
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Correct Answer: Bank rate
Solution : The correct answer is the Bank rate.
A bank rate is the interest rate at which a nation's central bank lends money to domestic banks, often in the form of very short-term loans. The Central Bank of India is the RBI, and the RBI lends money to domestic banks, and the domestic banks need to pay the interest rate.
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