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Question
In order to control inflation, the Central Bank need to ______.
Options
Increase Repo Rate
Increase Reserve Ratio
Both increase repo rate and increase reserve ratio
None of these
MCQ
Fill in the Blanks
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Solution
In order to control inflation, the Central Bank need to increase repo rate and increase reserve ratio.
Explanation:
A higher repo rate makes borrowing costlier, while a higher reserve ratio leaves commercial banks with less money to lend. Both measures help restrict credit and curb inflation.
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