Which of the following statements are true?

(A) Quantitative tools control the extent of money supply by changing the CRR.
(B) There are two types of open market operation-outright and upright.
(C) A fall in the bank rate can decrease the money supply.
(D) Selling of a bond by RBI leads to reduction in quantity of reserves.
(E) The RBI can influence money supply by changing the rate at which it gives loan to the commercial banks.

Choose the correct answer from the options given below:

(A), (D) and (E) only

The correct answer is Option (4) → (A), (D) and (E) only

(A) Quantitative tools control the extent of money supply by changing the CRR. True. The Cash Reserve Ratio (CRR) is a quantitative tool used by the central bank (like RBI in India) to control the money supply. By changing the CRR, the central bank can influence the amount of funds available with commercial banks for lending, thus impacting the money supply in the economy.

(B) There are two types of open market operation-outright and upright. False. There's no such distinction as "upright" open market operations. Open market operations typically involve buying or selling government securities to influence interest rates and money supply.

(C) A fall in the bank rate can decrease the money supply. False. A fall in the bank rate typically encourages borrowing and spending, which can increase the money supply. Lowering the bank rate reduces the cost of borrowing for commercial banks, which may lead to increased lending and thus, more money in circulation.

(D) Selling of a bond by RBI leads to a reduction in the quantity of reserves. True. When the RBI sells bonds in the open market, it withdraws money from the banking system. This decreases the reserves available with the banks, leading to a reduction in the quantity of reserves.

(E) The RBI can influence the money supply by changing the rate at which it gives a loan to the commercial banks.True. The rate at which the central bank (RBI) lends money to commercial banks is known as the bank rate/repo rate (or policy rate). By changing this rate, the RBI can influence the cost of borrowing for commercial banks, affecting their lending behavior and, consequently, the money supply.