Economics · Monetary Policy
What is the primary consequence when the central bank decides to decrease the 'Repo Rate' in an economy?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The central bank starts selling government securities
- 2Liquidity in the market is significantly reduced
- 3The cost of borrowing for commercial banks decreases✓
- 4Commercial banks increase their lending rates
Correct answer
The cost of borrowing for commercial banks decreases
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