Discussion
The discount rate of the RBI acts upon:
Answer: B
The discount rate, or bank rate, is the interest rate at which the central bank lends to commercial banks and other depository institutions. By raising or lowering it the RBI makes borrowing from it more or less costly, which feeds into other interest rates and the supply of credit. It is a tool for influencing the credit conditions in the economy, rather than directly stabilising prices, the business cycle or the exchange rate, though it may contribute to them. The answer is option B.
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