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Question
Which of the following is/are correct statement(s)?
Statement 1: The Central Bank can influence the country's economy by adjusting the Cash Reserve Ratio (CRR).
Statement 2: Commercial banks can issue currency notes as long as they meet the reserve requirements set by the Central Bank.
Options
Only Statement 1 is true.
Only Statement 2 is true.
Both statements are true.
Both statements are false.
MCQ
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Solution
Only Statement 1 is true.
Explanation:
The Cash Reserve Ratio (CRR) is an effective quantitative monetary policy tool that allows the Central Bank to control the money supply, credit creation, and inflation or growth.
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