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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:
Define qualitative credit control policy of the RBI.
During deflation, the Central Bank usually ______.
______ is a quantitative method of credit control.
Which of the following is not a quantitative method of credit control?
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 |
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 :
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.
Define the following term:
Cash Reserve Ratio.
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.
What do you mean by credit control?
Which are qualitative methods of credit control?
Define moral persuasion.
Describe two quantitative credit control measures of the Central Bank.
