Read the following case study paragraph carefully and answer the questions based on the same.

The central bank of India (Reserve Bank of India) is the apex institution that controls the entire financial market. It's one of the major function is to maintain the reserve of foreign exchange. Also, it intervenes in the foreign exchange market to stabilise the excessive fluctuations in the foreign exchange rate. In other words, it is the central bank's job to control a country economy through monetary policy.

If the economy is moving slowly or going backward, there are steps that central bank can take to boost the economy. These steps, whether they are asset purchases or printing more money, all involve injecting more cash into the economy. The simple supply and demand economic projection occur and currency will devalue. When the opposite occurs, and the economy is growing, the central bank will use various methods to keep that growth steady and in-line with other economic factors such as wages and prices. Whatever the central bank does or in fact don't do, will affect the currency of that country. Sometimes, it is within the central bank's interest to purposefully affect the value of a currency. For example, if the economy is heavily reliant on exports and their currency value becomes too high, importers of that country's commodities will seek cheaper supply; hence directly affecting the economy.

Suppose there is inflation in the economy. In this case the central bank can____________ to control inflation.

Increase the Reverse repo Rate

The answer is Increase the Reverse repo Rate.

When there is inflation in the economy, the central bank can increase the reverse repo rate to reduce the money supply and control inflation. The reverse repo rate is the interest rate that the central bank pays to commercial banks for borrowing money overnight. When the reverse repo rate is increased, it incentivizes banks to park more money with the central bank, reducing the money supply in the economy thereby reducing inflation. 

Decrease the Bank Rate:

• The bank rate is the rate at which the central bank lends money to commercial banks. If the central bank decreases the bank rate, borrowing becomes cheaper for commercial banks.
• Lower interest rates can encourage borrowing and spending by businesses and consumers. Increased spending stimulates economic activity, but it also carries the risk of fueling inflation.

Purchase Government Securities:

• When the central bank purchases government securities in the open market, it injects money into the economy. This is often referred to as open market operations.
• By buying government securities, the central bank provides funds to sellers (usually commercial banks), increasing their reserves. These banks, in turn, can lend more money to businesses and individuals resulting in more money supply in the economy. This in turn will result in more inflation.

Decrease in Margin Requirement:

• Margin requirements refer to the amount of money investors must put up when buying stocks or other financial instruments on margin (borrowed money).
• While changing margin requirements can influence the behavior of financial market participants, it is not a tool used by central banks to control inflation. Margin requirements are typically set by regulatory bodies or exchanges, and changes are made to ensure the stability of financial markets rather than as a direct response to inflation concerns.