Question

RBI lowers repo rate from 6.5% to 6.25% analyses the economic value of this statement from the viewpoint of

1. Commercial banks 2. Producers and 3. The economy. ​

Answer 1

Answer:

1. for commercial banks, they lose a little percentage of their income.

2. for producers, they get products in less price so they are happy

3. when banks lose, producers gain, economy remains constant, there is no change.

Explanation:

Answer 2

Explanation:

1. Commercial banks: commercial banks will give loans to general public at lower rate as well. General public will get benefit from it as they will be getting loans at low interest and this reduces the burden on them.

2. Producers: after cut the repo rate by 0.25% the interest rate also goes down.

3.Indian economy: Economy will boost due to reduced repo rate . Because due to this money supply, AD, and economic activities in the country will increase and will help the economy to boost.

The levels of repo have a direct impact on the cost of borrowing for banks. Higher the repo rate, higher will be the cost of borrowing for banks and vice-versa.