In a situation when RBI decides to increase the money supply in the economy, which of the following measures will be adopted?A. Increase in the Bank rateB. Decrease in the Bank rateC. Increase in the Cash Reserve RatioD. Decrease in the Cash Reserve RatioE. Buying of gov ernment securities in open marketChoose the correct answer from the options given below:a)A and C, E onlyb)B and D, E onlyc)A and B, D onlyd)B and C, E onlyCorrect answer is option 'B'. Can you explain this answer?

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In a situation when RBI decides to increase the money supply in the economy, which of the following measures will be adopted?
A. Increase in the Bank rate
B. Decrease in the Bank rate
C. Increase in the Cash Reserve Ratio
D. Decrease in the Cash Reserve Ratio
E. Buying of gov ernment securities in open market
Choose the correct answer from the options given below:

a)
A and C, E only
b)
B and D, E only
c)
A and B, D only
d)
B and C, E only

Correct answer is option 'B'. Can you explain this answer?

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In a situation when RBI decides to increase the money supply in the ec...

Bank Rate- Bank rate is the rate of interest at which central bank lends to commercial banks without any collateral (security for purpose of loan)
CRR – It refers to the minimum percentage of a bank’s total deposits, which it is required to keep with the central bank.
Decrease in these rates makes commercial bank to decrease their lending rates, which encourages borrowers from taking loans, which encourages investment and increase Money Supply
Central bank purchases of government securities and bonds from commercial bank increases the power of commercial bank of giving loans increases, which will increase money supply

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In a situation when RBI decides to increase the money supply in the economy, which of the following measures will be adopted?A. Increase in the Bank rateB. Decrease in the Bank rateC. Increase in the Cash Reserve RatioD. Decrease in the Cash Reserve RatioE. Buying of gov ernment securities in open marketChoose the correct answer from the options given below:a)A and C, E onlyb)B and D, E onlyc)A and B, D onlyd)B and C, E onlyCorrect answer is option 'B'. Can you explain this answer?

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