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.

Question

Option 1: Open Market Operations refers to buying and selling of bonds issued by the Government in the open market.

Option 2: The Reserve Bank of India conducts repo and reverse repo operations at various maturities.

Option 3: Margin requirement is a qualitative tool determined by the Central Bank to control money supply.

Option 4: If the Central bank decreases the reserve ratio, this would lead to decrease in lending by the banks.

AfterBoards · Accepted Answer

The answer is 'If the Central bank decreases the reserve ratio, this would lead to decrease in lending by the banks.'. View full solution:

CUET Economics 2026 19th May Shift 2 PYQs

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