In November 2008, the Reserve Bank of India (RBI) Lowered

question 24

Multiple Choice

In November 2008, the Reserve Bank of India (RBI) lowered its "repo" rate, the rate at which it lends to banks, from 8 percent to 7.5 percent. Only two weeks earlier, it had lowered the rate from 9 percent to 8 percent. The Economist, 11/6/2008
In its attempt to change real GDP, which of following sequences CORRECTLY describes the transmission of RBI's monetary policy?
I. The real interest rate falls.
II. The money supply increases.
III. Bank reserves increase.
IV. Supply of loanable funds increases.
V. Aggregate demand increases.

• A) III, II, IV, I,V
• B) II, I, III, V, IV
• C) V, I, II, IV, III
• D) III, IV, I, III, V

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Definitions:

Seamounts

Underwater mountains formed by volcanic activity, which rise from the ocean floor but do not reach the surface.

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Groups of islands formed close to one another, often as a result of volcanic activity along oceanic ridges or subduction zones.

Continental Drift

A theory that explains the gradual movement of continents across the earth's surface through geological time.

Glacial Deposits

Materials left behind by glaciers as they advance and retreat, including rocks, sediments, and debris.