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CUET Economics 2025 PYQs26 May Shift 2. Free, no login required.

Macro

past year questions, CUET Economics 2025 26 May Shift 2

Money & Banking

past year questions, Macro, CUET Economics 2025 26 May Shift 2

Medium

Which of the following is/are a qualitative tool of credit control adopted by the central bank of a country?

(A) Repurchase agreement.

(B) Moral suasion.

(C) Open market operations.

(D) Margin requirements.

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 2

Option 1 -> Incorrect. Only identifies moral suasion, but misses margin requirements which is also a qualitative tool.

Option 2 -> Identifies both moral suasion and margin requirements as qualitative tools, which is correct.

Option 3 -> Incorrect. Open market operations is a quantitative tool, not qualitative.

Option 4 -> Incorrect. Repurchase agreement (repo) is a quantitative tool affecting overall liquidity.

Hence, Option 2: (B) and (D) only -> Qualitative tools are selective credit control measures targeting specific sectors or purposes. Moral suasion involves the central bank persuading banks to follow certain policies for specific sectors. Margin requirements allow the central bank to set different margin levels for loans against various securities or purposes, making it sector-specific. In contrast, repurchase agreements and open market operations are quantitative tools that affect overall credit volume in the economy without discrimination between sectors. -> correct

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