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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.
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| 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 |
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| (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 |
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