ECONOMICS
FEDERAL RESERVE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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a system in which the basic unit of currency is equivalent to, and can be exchanged for, a specific amount of gold
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currency backed by the FED and issued by commercial banks
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currency that must be accepted for payment of all debts public and private
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a bank that can lend to other banks in times of need, or a “banker’s bank”
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Detailed explanation-1: -RBI lends funds to the commercial banks in times of need. 3. RBI advises the commercial banks on monetary matters.
Detailed explanation-2: -Supervising and regulating banks and other important financial institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers. Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets.
Detailed explanation-3: -The correct answer is B) Discount loans; Sources.
Detailed explanation-4: -The federal funds market is a market in which banks lend reserves to one another. The federal funds rate is the interest rate charged for such loans; it is determined by banks’ demand for and supply of these reserves.
Detailed explanation-5: -Repo Rate (RR) is the rate at which the Reserve Bank of India (RBI) lends money to commercial banks or financial institutions in India against government securities. The current Repo Rate 2022 is at 4.40%.