English

During deflation, the Central Bank usually ______.

Advertisements
Advertisements

Question

During deflation, the Central Bank usually ______.

Options

  • Increases CRR

  • Increases SLR

  • Increases bank rate

  • Increases buying Government Securities

MCQ
Fill in the Blanks
Advertisements

Solution

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.

shaalaa.com
Monetary Policy of the Central Bank
  Is there an error in this question or solution?
Chapter 9: Central Banks - QUESTIONS [Page 232]

APPEARS IN

Goyal Brothers Prakashan Economic Applications [English] Class 10 ICSE
Chapter 9 Central Banks
QUESTIONS | Q 24. | Page 232

RELATED QUESTIONS

Define bank rate.


In order to encourage investment in the economy, the central bank may ______.


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 : 


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.


Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given below: 

Assertion (A): Bank rate is a quantitative instrument of monetary policy.

Reason (R): During inflation, RBI reduces the bank rate.


What is meant by open market operations?


State the impact of an increase in Cash Reserve Ratio on loanable funds.


Briefly explain the following credit control methods adopted by the Central Bank.

Moral persuasion 


Which of the following statements are correct and which are incorrect? Give reasons.

  1. Central bank is a currency authority.
  2. Bank rate is a qualitative method of credit control.
  3. Quantitative methods regulate direction of credit.
  4. Bank rate is the rate at which commercial banks give loans to the public.
  5. Central bank should sell government securities when credit is to be expanded.

Identify the following Credit Control measure undertaken by the Central Bank during inflation.

The Central Bank sells government approved securities to the public.


Share
Notifications

Englishहिंदीमराठी


      Forgot password?
Use app×