| Directions : Read the following statements: |
| Assertion (A) and Reason (R). Choose one of the correct alternative. |
| Assertion (A):To boost the failing demand in the economy, Reserve Bank of India recently reduced Repo Rate and Bank Rate. |
| Reason (R):Decrease in Repo Rate and Bank Rate causes decrease in the rate of interest which leads to rise in demand of credit because of which more money flows into the system, purchasing power of people increases. Thus, aggregate demand rises and deficient demand is corrected. |
A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
B) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A).
C) Assertion (A) is true but Reason (R) is false.
D) Assertion (A) is false but Reason (R) is true.
Correct Answer: A
Solution :
[a] Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
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