Economics · Monetary Economics
Which of the following statements regarding monetary policy instruments is correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1During inflation, the central bank lowers interest rates to reduce investment expenditure
- 2The most effective anti-inflationary measure is reducing the Cash Reserve Ratio (CRR)
- 3The Central Bank may reduce CRR and SLR to expand credit and increase the money supply in the economy✓
- 4Repo rate is the rate at which the RBI lends long-term money to commercial banks against government securities
Correct answer
The Central Bank may reduce CRR and SLR to expand credit and increase the money supply in the economy
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