In order to control credit Reserve Bank of India should ........

Economics- Phase (I & II) Investment Function

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In order to control credit, Reserve Bank of India should

Increase CRR and decrease Bank rate

Decrease CRR and reduce Bank rate

Increase CRR and increase Bank rate

Reduce CRR and increase Bank rate

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Explanation:

In order to control credit, Reserve Bank of India should Increase CRR and increase Bank rate. During high inflation in the economy, RBI raises the CRR to lower the bank's loanable funds.CRR stands for Cash Reserve Ratio. It refers to the cash that banks have to maintain with the Reserve Bank of India (RBI). It is a certain percentage of the total cash held by a bank. CRR keeps changing from time to time.

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