Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Open Economy Macro Economics

Question:

Which of the following is a quantitative tool of credit control by the reserve bank of India?

Options:

Open market operations.

Margin requirements.

Moral suasion.

Direct Action

Correct Answer:

Open market operations.

Explanation:

The correct answer is Option (1) → Open market operations.

The Reserve Bank of India (RBI) uses credit control measures to regulate the flow of credit in the economy.
These tools are divided into two types:

  1. Quantitative (General) tools – affect the overall volume of credit in the economy.
    Examples:

    • Bank Rate Policy

    • Cash Reserve Ratio (CRR)

    • Statutory Liquidity Ratio (SLR)

    • Open Market Operations (OMO) 

  2. Qualitative (Selective) tools – influence the direction or use of credit.
    Examples:

    • Margin Requirements

    • Moral Suasion

    • Direct Action