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Question
______ is a quantitative method of credit control.
Options
Bank rate
Cash reserve ratio
Credit rationing
Both Bank rate and Cash reserve ratio
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Solution
Both Bank rate and Cash reserve ratio is a quantitative method of credit control.
Explanation:
The Bank Rate and the Cash Reserve Ratio (CRR) are quantitative methods of credit control used by the central bank to regulate the total money supply in the economy.
RELATED QUESTIONS
Define qualitative credit control policy of the RBI.
Explain how credit rationing helps to control credit in an economy.
During deflation, the Central Bank usually ______.
The central bank controls credit _____ .
In order to encourage investment in the economy, the central bank may ______.
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 |
During inflation, the central bank usually:
Differentiate between quantitative and qualitative methods of credit control.
Define the following term:
Cash Reserve Ratio.
Define the following term:
Margin Requirements.
The Central Bank is the apex monetary institution of the country. Explain its role of a custodian of foreign exchange reserves.
What is the credit supply policy in an economy called?
Identify the following Credit Control measure undertaken by the Central Bank during inflation.
The Central Bank sells government approved securities to the public.
What is meant by Legal Reserve Ratio?
Give an example of margin requirements.
