Macro

Money & Banking

Medium

Which of the following measure of monetary policy can be used to reduce the excess money supply from the economy?

By reducing the bank rate.

By buying government securities through open market operation(OMO).

By increasing cash reserve ratio(CRR).

By reducing statutory liquidity ratio(SLR).

✅ Correct Option: 3

Raising CRR forces banks to hold a larger fraction of deposits as reserves with the RBI, leaving less to lend, which contracts credit and money supply. Reducing bank rate, buying securities, or reducing SLR all expand, not reduce, money supply.

2026: 20 May Shift 1

Match List-I with List-II

List-I	List-II
(A) M1	(I) M1 + Net time deposits of commercial banks
(B) M2	(II) CU +DD
(C) M3	(III) M3+Total deposits with Post Office savings organisations (Except NSC).
(D) M4	(IV) M1 + Saving deposits with post office saving banks.

Choose the correct answer from the options given below:

2025: 14 May Shift 1

The bank rate and reserve money are the monetary tools of RBI to regulate the money flow with ...........

Cooperative banks
External banks
Central bank
Commercial banks

2025: 21 May Shift 1

Currency notes and coins are termed as ________.

2022: 10 Aug Shift 2

Which of the following is a function of RBI ?

2025: 13 May Shift 2

Arrange the following money measures into their high to low liquid form.

(A) M4

(B) M2

(D) M3

Choose the correct answer from the options given below:

2025: 31 May Shift 1

If the market rate of interest is already low enough so that everybody expects it to rise in future, causing capital losses, nobody will wish to hold bonds. This situation is called.............

Jevons Paradox
Liquidity trap
Paradox of thrift
Double coincidence of wants

Which of the following measure of monetary policy can be used to reduce the excess money supply from the economy?

Solution

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