Consider the following statements 1 The repo rate is the rate at which other banks borrow from the R...........

Economic Affairs Money Supply and Monetary Policy

Consider the following statements:

1.The repo rate is the rate at which other banks borrow from the Reserve Bank of India.

2.A value of 1 for Gini Coefficient in a country implies that there is perfectly equal income for everyone in its population.

Which of the statements given above is/are correct?

1 only

2 only

Both 1 and 2

Neither 1 nor 2

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Explanation:

The first statement is correct. The repo rate is indeed the rate at which commercial banks borrow money from the Reserve Bank of India (RBI). It's a key monetary policy tool used by the RBI to control liquidity and inflation in the economy.

The second statement is incorrect. A Gini Coefficient of 1 indicates perfect inequality, not equality. It means that all income or wealth is concentrated in the hands of one person or a small group, while the rest of the population has none. A Gini Coefficient of 0, on the other hand, would indicate perfect equality, where everyone has the same income.

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