Monetary policy tools are generally classified into quantitative and qualitative measures. Quantitative tools affect the overall volume of credit in the economy (e.g., Bank Rate, CRR, Open Market Operations). Qualitative tools, also known as selective credit controls, aim to influence the direction or flow of credit to specific sectors or for particular purposes. Credit Rationing, where the central bank or government restricts the availability of credit to certain sectors or mandates allocation to others, is a classic example of a qualitative tool.
Which one of the following is a qualitative tool of monetary policy ?
Asked in UPSC Combined Section Officer 2024 · Topic: Money & Banking (Monetary Policy: Objectives, Instruments (quantitative and qualitative), and Transmission Mechanism)
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