Question

Cash reserve Ration (CRR) is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank of a country. CRR ___

• A. makes it cheaper for banks to borrow money
• B. is a tool, which the central bank uses for short- term purposes
• C. gives greater control to the central bank over money supply
• D. marks a shift from earlier method of calibrating various policy rates separately
• E. None of these

Answer 1

The correct option is C gives greater control to the central bank over money supply

CRR gives greater control to the central bank over the money supply.