Question

During inflation, the central bank usually: 

विकल्प

• Decreases bank rate 

• Decreases cash reserve ratio 

• Increases bank rate 

• Buys government securities

Answer 1

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.