Multiple Choice Questions on If lsquo Tight Monetary Policy rsquo is being followed by Central Bank which of the following ........... for UPSC Civil Services Examination (General Studies) Preparation

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Multiple Choice Questions

If lsquo Tight Monetary Policy rsquo is being followed by Central Bank which of the following ...........

Economic Affairs Money Supply and Monetary Policy
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     If ‘Tight Monetary Policy’ is being followed by Central Bank, which of the following steps would be used?

    1.    Increase reserve ratios with banks

    2.    Buy government securities

    3.    Decreasing foreign currency reserves

    The correct steps are:

     1 only   

    Correct Answer

     2 and 3

    Incorrect Answer

     1 and 3

    Incorrect Answer

     All the above

    Incorrect Answer
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    Explanation:

    Tight-money policy definition- A policy in which a central monetary authority, for example, the Federal Reserve System, seeks to restrict credit and raise interest rates. A tight-money policy might be pursued to limit inflation.

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