How RBI increases liquidity in the market through Bank Rate Reduction

Q.  What will be the impact if Reserve Bank of India reduces the Bank Rate by 1%?
- Published on 19 Oct 15

a. Less liquidity in the market
b. More liquidity in the market
c. No change in the market liquidity
d. Mobilisation of more deposits by commercial banks

ANSWER: More liquidity in the market
 
Market liquidity is a market's ability to facilitate an asset being sold quickly without having to reduce its price.

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