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Question
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 :
Options
Repo rate
Open market operation
Cash reserve ratio
Margin requirement
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Solution
Quantitative method of credit control by the central bank : Bank rate.
Quantitative method of credit control by the central bank : Margin requirement.
Explanation:
- The bank rate is a quantitative tool the central bank uses to manage the money supply.
- Similarly, margin requirements are qualitative credit control measures, whereas repo rates, open market operations, and cash reserve ratios are quantitative.
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