Question

To reduce credit availability in the economy, the Central Bank may ______.

Options

• Buy securities in the open market.

• Sell securities in the open market.

• Reduce reserve ratio.

• Reduce repo rate.

Answer 1

To reduce credit availability in the economy, the Central Bank may sell securities in the open market.

Explanation:

Because when the Central Bank sells securities, money is taken from the public/banks, so credit availability decreases.