Economics · Credit Rationing

What is the primary operational effect of credit rationing when implemented by monetary authorities?

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1It forces all commercial banks to operate exclusively in international markets.
2It restricts and regulates the total volume and direction of bank lending.✓
3It eliminates the need for maintaining statutory cash reserve ratios by banks.
4It permanently expands the money supply across all sectors of the economy.

Correct answer

It restricts and regulates the total volume and direction of bank lending.

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