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प्रश्न
During inflation, the central bank usually:
पर्याय
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
Briefly explain two qualitative methods of credit control adopted by this institution.
The rate of which commercial banks borrow from the Central Bank is the:
The central bank controls credit _____ .
In order to encourage investment in the economy, the central bank may ______.
Bank rate is the rate at which:
Match the following and select the correct option:
| Column A | Column B | ||
| (i) | A rate of interest at which the central bank (RBI) lends money to member commercial banks to meet they long term needs. | A. | Cash Reserve Ratio |
| (ii) | A rate of interest at which RBI lends money to commercial banks to meet their short term needs. | B. | Statutory liquidity ratio |
| (iii) | A minimum percentage of total deposits kept by banks with the Central Bank. | C. | Repo rate |
| (iv) | A minimum percentage of total deposits to be kept by banks inform of liquid assets with themselves. | D. | Bank rate |
Observe the relationship of the first pair of words and complete the second pair.
Quantitative method of credit control by the central bank : Bank rate.
Quantitative method of credit control by the central bank :
Central bank is the lender of the last resort. Explain.
Which of the following statements are correct and which are incorrect? Give reasons.
- Central bank is a currency authority.
- Bank rate is a qualitative method of credit control.
- Quantitative methods regulate direction of credit.
- Bank rate is the rate at which commercial banks give loans to the public.
- Central bank should sell government securities when credit is to be expanded.
Define moral persuasion.
