In the Monetary Policy announced for the year 2006-07 the following announcements have been made- Bank Rate, Repo Rate, Reverse Repo Rate and Cash Reserve Ratio have been kept unchanged at their present levels of 6 per cent, 6.5 per cent, 5.5 per cent and 5 per cent respectively. These have been kept unchanged as liquidity pressure seen during the last 4 months of 2005-06 have eased off considerably. In the given paragraph it is stated that Bank Rate and Cash Reserve Ratio (CRR) have been kept unchanged.
What can RBI do if it wants to control credit in the economy?

Decrease Bank Rate and decrease CRR.

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Increase Bank Rate and increase CRR.

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Increase Bank Rate and decrease CRR

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Money in traditional sense: Decrease Bank Rate and increase CRR

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Solution

The correct option is B Increase Bank Rate and increase CRR.
RBI does if it wants to control credit in the economy then Increase Bank Rate and increase CRR, because it will discourage the investment and credit will be controlled.

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(ii) Purchase of Securities in the open market.
(iii) RBI increases the margin from

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(iv) RBI reduces the Cash reserve ratio.

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The correct option is B Increase Bank Rate and increase CRR.RBI does if it wants to control credit in the economy then Increase Bank Rate and increase CRR, because it will discourage the investment and credit will be controlled.

The correct option is B Increase Bank Rate and increase CRR.
RBI does if it wants to control credit in the economy then Increase Bank Rate and increase CRR, because it will discourage the investment and credit will be controlled.