Question

When does the Central Bank increase the minimum statutory cash reserve ratio of the commercial banks ?
1. When the economy is in deflationary condition.
2. When the economy is experiencing inflation.
3. When the Central Bank aims credit expansion.
4.When the Central bank aims credit contraction.
Select the correct answer using the code given below:

• A. 1 and 3
• B. 1 and 4
• C. 2 and 3
• D. 2 and 4

Answer 1

The correct option is D 2 and 4

When the economy is experiencing inflation and when Central Bank aims credit contraction, Central Bank increases the minimum statutory cash reserve ratio.