Question

In the present COVID-19 situation, many economists have raised their concerns that the Indian economy may have to face a deflationary situation due to reduced economic activities in the country. Suppose you are a member of the high-powered committee constituted by the Reserve Bank of India (RBl). You have suggested that as the supervisor of commercial banks, ______ (restriction/release) of the money supply be ensured by the Reserve Bank of India (RBI).

Options

• Restriction

• Release

• Either (1) or (2)

• Neither (1) nor (2)

Answer 1

Release

Explanation:

The RBI should print money because it will raise the money supply in the economy, which will boost production.