Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Money and Banking

Question:
Which of the following does not come under the quantitative methods of monetary policy?
Options:
Cash Reserve Ratio
Statutory liquidity ratio
Repo Rate
Moral Suasion
Correct Answer:
Moral Suasion
Explanation:
The tools used by the Central bank to control money supply can be quantitative or qualitative. Quantitative tools, control the extent of money supply by changing the CRR, or bank rate or open market operations. Qualitative tools include persuasion by the Central bank in order to make commercial banks discourage or encourage lending which is done through moral suasion, margin requirement, etc