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Prelims-IAS –ECONOMICS MCQ Ans-30

QUESTION- Prelims-IAS – ECONOMICS MCQ-30
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1..

  • ANS-D
  • interbank is the rate on which banks (commercial) borrow or lend from each other and not the central bank.
  • If a bank is weak and unlikely to repay money on time then the rival banks will demand higher interest rate while lending money to that weak bank.
  • Means, A bank has to pay a higher interest rate to borrow funds if other lending banks have less confidence in it.
  • So, The rate each bank has to pay is in part a reflection of their rivals’ perception of its financial strength, effectively how much it is trusted.
  • This means that the Libor/mibor rate gives an indication of the health of the wider banking sector.

2…

  • ANS-A

3…

  • ANS-B

4..

  • ANS-D

5..

  • ANS-C

 

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