The correct answer is (b) Repo rate.
The repo rate is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks in the short-term. The RBI uses the repo rate to control the money supply in the economy. When the RBI wants to increase the money supply, it lowers the repo rate. This makes it cheaper for banks to borrow money from the RBI, and they can then lend more money to their customers. When the RBI wants to decrease the money supply, it raises the repo rate. This makes it more expensive for banks to borrow money from the RBI, and they will then lend less money to their customers.
The bank rate is the interest rate at which the RBI lends money to commercial banks on a long-term basis. The bank rate is not used as frequently as the repo rate to control the money supply.
The reverse repo rate is the interest rate at which commercial banks lend money to the RBI in the short-term. The reverse repo rate is used by the RBI to absorb excess liquidity from the banking system. When the RBI wants to absorb excess liquidity, it raises the reverse repo rate. This makes it more attractive for banks to lend money to the RBI, and they will then withdraw money from their customers.
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