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Shift 05/06/2023 8:30 AM - 10:30 AM
Correct Answer
The policy tools used by the Reserve Bank of India to control money supply in the economy are:
(A) Repo-rate: The repo rate is the rate at which the central bank (RBI) lends money to commercial banks. By changing the repo rate, the RBI can influence the cost of borrowing for banks, which, in turn, affects their lending and deposit rates. This, in turn, influences the money supply in the economy.
(C) Open market operations: Open market operations involve the buying and selling of government securities by the central bank. When the RBI sells government securities, it reduces the money supply in the economy, and when it buys government securities, it increases the money supply.
(D) Bank rate: The bank rate is the rate at which the central bank lends money to commercial banks on a long-term basis. By changing the bank rate, the RBI can influence the cost of long-term borrowing for banks and, subsequently, their lending and deposit rates, impacting the money supply.
So, the correct answer is: (3) (A), (C), (D) Only
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