MCQ
Fill in the blanks with appropriate alternatives given in the bracket.
To increase credit creation Central Bank __________ the debentures.
Options
1.purchases
2.sells
3..borrows
4.stocks
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Solution
To increase credit creation Central Bank purchases the debentures.
Explanation:
When the central bank purchases debentures and securities, money supply increases in the economy. This in turn increases the process of credit creation by the commercial banks in the economy,
Concept: Definition - Central Bank
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