Advertisements
Advertisements
प्रश्न
During inflation, the central bank usually:
विकल्प
Decreases bank rate
Decreases cash reserve ratio
Increases bank rate
Buys government securities
Advertisements
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.
APPEARS IN
संबंधित प्रश्न
Which of the following is a selective/qualitative method of credit control?
Define qualitative credit control policy of the RBI.
The central bank controls credit _____ .
In order to encourage investment in the economy, the central bank may ______.
Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Increase in cash reserve ratio adversely affects the capacity of commercial banks to create credit.
Reason (R): An increase in cash reserve ratio reduces the excess reserves of commercial banks and hence limits their credit creating power.
Define the term Statutory Liquidity Ratio.
Identify the following Credit Control measure undertaken by the Central Bank during inflation.
The Central Bank sells government approved securities to the public.
Identify the following Credit Control measures undertaken by the Central Bank during inflation.
The Central Bank increases the rate at which it lends to the Commercial Bank.
Which are qualitative methods of credit control?
Describe two quantitative credit control measures of the Central Bank.
