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प्रश्न
During inflation, the central bank usually:
विकल्प
Decreases bank rate
Decreases cash reserve ratio
Increases bank rate
Buys government securities
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उत्तर
Increases bank rate
Explanation:
During inflation, the central bank normally raises the bank rate. This makes borrowing more expensive for commercial banks, resulting in higher interest rates for individuals and companies. The greater cost of borrowing reduces the economy's money supply, which helps to keep inflation under control.
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संबंधित प्रश्न
Define bank rate.
In order to encourage investment in the economy, the central bank may ______.
Give any two reasons as to why a country needs a central bank.
What is meant by open market operations?
State the impact of an increase in Cash Reserve Ratio on loanable funds.
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Briefly explain the following credit control methods adopted by the Central Bank.
Moral persuasion
Central bank is the lender of the last resort. Explain.
Identify the following Credit Control measure undertaken by the Central Bank during inflation.
The Central Bank sells government approved securities to the public.
Describe two quantitative credit control measures of the Central Bank.
