Macro

Money & Banking

Easy

The RBI controls the money supply in the economy in various ways. The tools used by the Central bank to control money supply can be quantitative or qualitative. Identify the INCORRECT statement from the following in this context.

Open Market Operations refers to buying and selling of bonds issued by the Government in the open market.

The Reserve Bank of India conducts repo and reverse repo operations at various maturities.

Margin requirement is a qualitative tool determined by the Central Bank to control money supply.

If the Central bank decreases the reserve ratio, this would lead to decrease in lending by the banks.

✅ Correct Option: 4

A decrease in the reserve ratio (CRR/SLR) leaves banks with more loanable funds, so lending increases, not decreases; option 4 is therefore incorrect. The other statements are true: OMOs involve buying and selling government bonds, the RBI conducts repo and reverse repo operations at various maturities, and margin requirement is a qualitative credit control tool.

2025: 29 May Shift 2

Suppose, in a hypothetical economy, the cash reserve ratio is 20% and initial deposits are Rs.100. The value of money which a bank can use to give as a loan in the first round would be

2025: 21 May Shift 1

If the central bank purchases the government securities from the commercial banks, it is likely to

2026: 20 May Shift 1

Given, Staturary Liquid Ratio=20%

A comercial bank deposits=Rs.1200

How much money the bank can give as a loan ?

2025: 31 May Shift 1

Suppose there is a fresh deposit of Rs. 10,000 in banks and cash reserve ratio is 0.5. How much is total deposit creation?

20,000
50,000
10,000
5000

2025: 2 June Shift 1

Why did Monetary Policy Committee keep its policy rate unchanged in its recent meet?

2025: 29 May Shift 1

Which of the following are major functions of commercial banks?

The RBI controls the money supply in the economy in various ways. The tools used by the Central bank to control money supply can be quantitative or qualitative. Identify the INCORRECT statement from the following in this context.

Solution

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