Multiple Choice Questions on Which of the following measures can be taken by the RBI to check economic slowdown Increasing the du........... for UPSC Civil Services Examination (General Studies) Preparation

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Multiple Choice Questions

Which of the following measures can be taken by the RBI to check economic slowdown Increasing the du...........

Economic Affairs Money Supply and Monetary Policy
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    Which of the following measures can be taken by the RBI to check economic slowdown?

    1. Increasing the duration of repo rate
    2. Decreasing the duration of repo rate
    3. Removing the Cash Reserve Ratio (CRR) requirement for all kinds of loans

    Select the correct code:

     

    1&2 only

    Incorrect Answer

    2 only

    Incorrect Answer

    1 only

    Correct Answer

    1&3 only

    Incorrect Answer
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    Explanation:
    • Increasing the duration of repo rate: this essentially means that a bank can take money from the rate at an interest rate of 5.15 per cent (which is the repo rate) and use it for lending onwards; it has to return this money after a longer and comfortable duration.
    • Removing the CRR requirement for all kinds of loans can cause instability in banking system as CRR acts as a buffer against loans given.

    By: Shubham Tiwari
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