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प्रश्न
State the impact of an increase in Cash Reserve Ratio on loanable funds.
What is the impact of an increase in Cash Reserve Ratio on loanable funds?
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उत्तर
- An increase in the Cash Reserve Ratio (CRR) requires commercial banks to maintain a higher portion of their deposits as reserves with the Reserve Bank of India.
- This reduces the amount of money available to banks for lending, resulting in a fall in total loanable funds.
- As a result, bank's ability to lend to consumers and businesses decreases, thereby slowing economic activity.
संबंधित प्रश्न
Briefly explain two qualitative methods of credit control adopted by this institution.
Explain how credit rationing helps to control credit in an economy.
During deflation, the Central Bank usually ______.
Bank rate is the rate at which:
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.
What is meant by open market operations?
Define the following term:
Margin Requirements.
Briefly explain the following credit control methods adopted by the Central Bank.
Moral persuasion
Central bank is the lender of the last resort. Explain.
Give an example of margin requirements.
