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Question
The central bank controls credit _____ .
Options
Through quantitative methods only.
Through qualitative methods only.
Both through quantitative methods and through qualitative methods.
Neither through quantitative methods nor through qualitative methods.
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Solution
Both through quantitative methods and through qualitative methods
Explanation:
The central bank uses a combination of both methods to effectively control credit in the economy.
RELATED QUESTIONS
Briefly explain two qualitative methods of credit control adopted by this institution.
The difference between the value of security and the amount of loan sanctioned against these securities is known as:
______ is a quantitative method of credit control.
Bank rate is the rate at which:
The process of buying and selling of securities by the central bank of a country is known as ______.
Match the following and select the correct option:
| Column A | Column B | ||
| (i) | A rate of interest at which the central bank (RBI) lends money to member commercial banks to meet they long term needs. | A. | Cash Reserve Ratio |
| (ii) | A rate of interest at which RBI lends money to commercial banks to meet their short term needs. | B. | Statutory liquidity ratio |
| (iii) | A minimum percentage of total deposits kept by banks with the Central Bank. | C. | Repo rate |
| (iv) | A minimum percentage of total deposits to be kept by banks inform of liquid assets with themselves. | D. | Bank rate |
During inflation, the central bank usually:
What is meant by open market operations?
Define the term Statutory Liquidity Ratio.
State the impact of an increase in Cash Reserve Ratio on loanable funds.
Differentiate between quantitative and qualitative methods of credit control.
Briefly explain the following credit control methods adopted by the Central Bank.
Moral persuasion
Central bank is the lender of the last resort. Explain.
Which of the following statements are correct and which are incorrect? Give reasons.
- Central bank is a currency authority.
- Bank rate is a qualitative method of credit control.
- Quantitative methods regulate direction of credit.
- Bank rate is the rate at which commercial banks give loans to the public.
- Central bank should sell government securities when credit is to be expanded.
Who controls the credit supply in an economy?
Identify the following Credit Control measures undertaken by the Central Bank during inflation.
The Central Bank increases the rate at which it lends to the Commercial Bank.
What are quantitative methods of credit control?
What is meant by Legal Reserve Ratio?
Describe two quantitative credit control measures of the Central Bank.
