Which of the following are true-
a) RBI use qualitative tools such as moral suasion, open market operations, margin requirements etc, to control money supply.
b) RBI buys government securities in the open market, when it intends to decrease the money supply in the economy.

Both a and b are false

The correct answer is Option 4: Both a and b are false

a) RBI use qualitative tools such as moral suasion, open market operations, margin requirements etc, to control money supply: This is statement is only partially correct. While moral suasion and margin requirements are qualitative tools, open market operations are a quantitative tool. Hence, the statement is false.

b) RBI buys government securities in the open market, when it intends to decrease the money supply in the economy: This is also incorrect. In order to decrease the money supply in the market, the RBI sells the government securities in the open market. When RBI buy securities, people sell them, leaving more money in their hands thus increasing money supply.