Qualitative Tool of Monetary Policy: Credit Rationing
Qualitative tools of monetary policy refer to the use of non-price methods to control the quantity of credit in the economy. Credit rationing is one such qualitative tool used by central banks to regulate the flow of credit in the economy.

Explanation:
- Credit Rationing: Credit rationing involves the selective allocation of credit by financial institutions based on certain criteria such as creditworthiness, purpose of the loan, or risk profile of the borrower. By restricting the availability of credit to specific sectors or individuals, the central bank can influence the overall level of economic activity.
- Bank Rate: Bank Rate is a quantitative tool of monetary policy that refers to the rate at which the central bank lends to commercial banks. It directly affects the cost of borrowing and is used to control inflation and economic growth.
- Credit Ceiling: Credit Ceiling is a quantitative tool that sets a limit on the total amount of credit that banks can extend to borrowers. It helps in controlling the overall level of credit in the economy.
- Cash Reserve Ratio: Cash Reserve Ratio is another quantitative tool that requires banks to maintain a certain percentage of their deposits as reserves with the central bank. By adjusting this ratio, the central bank can influence the amount of money that banks can lend out.
In conclusion, credit rationing is a qualitative tool of monetary policy that involves the selective allocation of credit to influence economic activity. It is different from quantitative tools like Bank Rate, Credit Ceiling, and Cash Reserve Ratio, which focus on controlling the quantity of money in the economy through interest rates and reserve requirements.