Which of the following is not a quantitative measure of credit control...
Quantitative Measures of Credit Control
Quantitative measures of credit control are the tools used by the central bank to regulate the supply of money in the economy. There are various quantitative measures of credit control, such as:
1. Bank Rate Policy - This is the interest rate at which the central bank lends money to commercial banks. By increasing or decreasing the bank rate, the central bank can control the amount of money in circulation in the economy.
2. Open Market Operations - This involves the buying and selling of government securities by the central bank. By buying government securities, the central bank injects money into the economy, while selling government securities withdraws money from the economy.
3. Repo Rate - This is the interest rate at which the central bank borrows money from commercial banks. By increasing or decreasing the repo rate, the central bank can influence the cost of borrowing for commercial banks and thereby regulate the supply of money in the economy.
4. Consumer Credit Regulation - This refers to the regulation of credit facilities provided by banks to consumers. The central bank can regulate the amount of credit that banks can provide to consumers by imposing limits on interest rates, loan amounts, and repayment periods.
Not a Quantitative Measure of Credit Control
Consumer Credit Regulation is not a quantitative measure of credit control because it does not directly regulate the supply of money in the economy. Instead, it regulates the credit facilities provided by banks to consumers. While it can indirectly affect the supply of money in the economy by influencing the amount of credit provided by banks, it is not a direct tool used by the central bank to regulate the supply of money. Therefore, option 'C' is the correct answer.
Which of the following is not a quantitative measure of credit control...
C: Consumer Credit Regulation
The options you listed are all quantitative measures of credit control, except for consumer credit regulation.
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The Bank Rate Policy: The central bank can influence the supply and demand of credit in the economy by changing the bank rate, which is the interest rate at which the central bank lends money to commercial banks. When the bank rate is increased, it becomes more expensive for banks to borrow from the central bank, which in turn increases the cost of borrowing for customers. This can reduce the demand for loans and help to curb inflationary pressures.
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Open Market Operations: The central bank can also influence the supply of credit in the economy through open market operations, which involve buying and selling government securities in the open market. When the central bank buys securities, it increases the supply of money in the economy, which can stimulate economic activity. When it sells securities, it reduces the supply of money, which can help to curb inflationary pressures.
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The Repo Rate: The repo rate is the interest rate at which the central bank lends money to commercial banks through repurchase agreements (repos). By increasing the repo rate, the central bank can make it more expensive for banks to borrow from the central bank, which can reduce the supply of credit in the economy.
Consumer credit regulation refers to the regulation of the lending of money to consumers, such as through credit cards, personal loans, and mortgages. This is not a quantitative measure of credit control, as it does not directly affect the supply or demand of credit in the economy.
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