Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Discount Rate (Bank Rate)
This is the rate on central bank advances and is also called official discount rate or "minimum lending rate". When commercial banks find themselves short of cash they may, instead of contracting bank deposits, go to the central bank, which can make additional cash available in its capacity as "lender of last resort", to help the banks out of their difficulties. The Central Bank can make cash available on a short-term basis in either of two ways; by lending cash directly, charging a rate of interest which is referred to as the official "discount rate", or by buying approved short-term securities from the commercial banks. The central bank exercises regulatory powers as a lender of last resort by making this help both more expensive to get and more difficult to get. It can do the former by charging a very high "penal" rate of interest, well above other short-term rates ruling in the money market. Similarly, when it makes cash available by buying approved short-term securities, it can charge a high effective rate of interest by buying them at low prices. The effective rate of interest charged when central bank buys securities (supplying cash) is in fact a re-discount rate, since the bank is buying securities which are already on the market but at a discount.
The significance of this rate of interest charged by the central bank in one way or the other to commercial banks, as a lender of last resort, is that if this rate goes up the commercial banks, who find that their costs of borrowing have increased, are likely to raise the rates of interest on their lending to businessman and other borrowers. Other interest rates such as those charged by building societies on house mortgages, are then also likely to be pulled up.
How Income level must remain constant - law of demand The law of demand operates only when income level of the buyer remains constant. If income rises when the price of commod
Marginal Revenue (MR) This is the increase in Total Revenue resulting from the sale of an extra unit of output. Thus, if TR n-1 is Total Revenue from the sale of (n-1) units
Q. Explain the Game theory? Game theory: Game theory is a branch of applied mathematics which is used in the social sciences, most particularly in economics, as well as in b
What are the important external forces Management has to identify all significant factors which influence a firm. These factors can largely be divided into two categories. Mana
Household This refers to all the people who live under one roof and who make or are subject to others making for them, joint financial decisions. The household decisions are a
Drafting of Production Policy: Demand forecasts assists in drafting appropriate production policy so that there may not be any space between future demand and supply of a product.
Dan and Ann are chemical engineers working for a biotech company. Each of them would like to be promoted to a managerial position, but only one of them can get the job. Their super
Importance of Cross Elasticity Knowledge of cross elasticity is necessary when the government wants to impose a tariff on an imported commodity to protect a domestic industry.
Demand Function for Money In the Keynesian analysis , the demand for money is a function of the level of income and the rate of interest. According to Milton Friedman, the dema
Equilibrium National Income in a Frugal Economy Saving and investment are examples of two categories of expenditure called withdrawals and injections. A WITHDRAWAL is any inc
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd