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 Which of the following methods cannot be used as an instrument of quantitative control of credit by the central Bank?
  • a)
    Bank Rate policy 
  • b)
    Open Market operations 
  • c)
    Changes in Margin requirements 
  • d)
    Variations in reserve ratio 
Correct answer is option 'C'. Can you explain this answer?
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Which of the following methods cannot be used as an instrument of quan...
The correct answer is 'C' - Changes in Margin Requirements. Changes in Margin Requirements is a qualitative or selective method of credit control, and cannot be used as an instrument of quantitative control of credit by the central Bank. The methods used by the central bank to influence the total volume of credit in the banking system, without any regard for the use to which it is put, are called quantitative or general methods of credit control. These methods regulate the lending ability of the financial sector of the whole economy and do not discriminate among the various sectors of the economy. The important quantitative methods of credit control are- (a) bank rate, (b) open market operations, and (c) cash-reserve ratio.
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Which of the following methods cannot be used as an instrument of quan...
Changes in margin requirement
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Which of the following methods cannot be used as an instrument of quantitative control of credit by the central Bank?a)Bank Rate policyb)Open Market operationsc)Changes in Margin requirementsd)Variations in reserve ratioCorrect answer is option 'C'. Can you explain this answer?
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