Economics · Credit Rationing

As a qualitative tool of monetary policy, what action does credit rationing empower a central bank or commercial bank to take?

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1To print unlimited legal tender to satisfy every single borrower in the country.
2To forcefully nationalize all private corporate assets in the financial market.
3To fix a maximum ceiling on loans for specific sectors, extending credit to some while refusing others.✓
4To mandate that all commercial bank loans must carry a zero percent interest rate.

Correct answer

To fix a maximum ceiling on loans for specific sectors, extending credit to some while refusing others.

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