Question

During deflation, the Central Bank usually ______.

पर्याय

• Increases CRR

• Increases SLR

• Increases bank rate

• Increases buying Government Securities

Answer 1

During deflation, the Central Bank usually increases buying Government Securities.

Explanation:

During deflation, the central bank works to raise the money supply in the economy, hence increasing the demand for products. This is only conceivable if Increases buying Government Securities is chosen, which involves increasing the money supply by purchasing government assets on the market.