Question : Which of the following statement are true? Repo rate of interest is paid by the commercial bank and reverse repo rate is paid by RBI. Fiscal policy always increases revenue for the government. Option 1: Both are true. Option 2: Both are false. Option 3: S ...

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Question : Which of the following statement are true?

Repo rate of interest is paid by the commercial bank and reverse repo rate is paid by RBI.

Fiscal policy always increases revenue for the government.

Option 1: Both are true.

Option 2: Both are false.

Option 3: Statement 1 is true, statement 2 is false.

Option 4: Statement 1 is false, statement 2 is true.

Team Careers360 6th Jan, 2024

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Answer (1)

Team Careers360 13th Jan, 2024

Correct Answer: Statement 1 is true, statement 2 is false.

Solution : When a commercial bank get loan from RBI, it is Repo rate of interest to RBI and when commercial bank park for their surplus fund with RBI, then RBI pays reverse repo rate of interest to commercial bank.
Fiscal policy aims to ensure fiscal balance in the economy, which may require increase in revenue and expenditure by the government.
Hence, Option C is correct.

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