Notes of bank rate - Economics
Give notes Bank rate Answer: 1) Bank Rate Bank Rate is considered to be the oldest and most effective means of controlling the decline of the Central Bank. This is because changes in bank rates have an immediate effect on the number of currencies in the economy. Therefore, the central bank rate is used as a numerical tool to control the decline. Explanation: 1) "Bank rate is the rate at which the central bank lends money to commercial banks." 2) "The rate at which the central bank restructures the merchant bank's dowry is called the bank rate. Market rate: "The interest rate at which commercial banks lend to the borrower is called the market interest rate." There is a close relationship between bank rates and market rates and they are interdependent. Also, the market rate is always higher than the bank rate. This is because commercial banks make a profit by borrowing from the central bank and paying a higher rate to the borrower. Changes in bank rates
