Distinguish Between 'Qualitative and Quantitative Tools' of Credit Control as May Be Used by a Central Bank. - Economics

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Distinguish Between

Distinguish between 'Qualitative and Quantitative tools' of credit control as may be used by a Central Bank.

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Solution

Basis Quantitative Tools Qualitative Tools
Definition Quantitative instruments of monetary policy are the measures that affect the overall supply of money/credit in the economy. Qualitative instruments of monetary policy, as against the quantitative instruments affect the flow and direction of credit to particular sectors in a positive or negative manner.
Tools Bank rate, Open Market Operations, Cash Reserve Ratio, Statutory Liquidity Ratio are the quantitative tools used to control the credit. Margin Requirements, Moral Suasion, Selective Credit Control, Direct Action, Rationing of Credit are the qualitative tools used to control the credit.
Concept: Central Bank Function - Controller of Credit
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