Central banks use various instruments like the bank rate, open market operations (OMO), and reserve ratios (CRR, SLR) to control the money supply and credit conditions, influencing inflation and economic activity.
Consider the following statements regarding instruments of Monetary Policy: 1. The Central Bank can increase the money supply by increasing the bank rate 2. The Central Bank can increase the money supply by purchasing securities from the public 3. The Central Bank can decrease the money supply by increasing the cash reserve ratio Which of the statements given above is/are correct ?
Asked in UPSC CAPF 2024 · Topic: Money & Banking (Monetary Policy: Objectives, Instruments (quantitative and qualitative), and Transmission Mechanism)
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