Commercial Applications
Central bank regulates credit through
- Open market operations
- Bank rate
- Reserve requirements
- All of these
Banking
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Answer
All of these
Reason — The central bank uses several methods to regulate credit. Quantitative methods include Bank Rate Policy, Open Market Operations, Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). Qualitative methods include margin requirements, credit rationing, moral suasion and publicity. All three options listed (open market operations, bank rate, reserve requirements) are used together by the central bank to regulate credit.
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Related Questions
When considering the functions of commercial banks, which statement(s) is (are) correct?
(1) Commercial banks provide loans and advances to individuals and businesses.
(2) Commercial banks are solely responsible for issuing currency.
(3) Commercial banks have no involvement in government transactions.
(4) Commercial banks play a crucial role in the money creation process through lending.
- 1 & 3
- 2 & 4
- Only 1
- 1 & 4
Assertion (A): One of the primary functions of a central bank is to act as the lender of last resort.
Reason (R): Central banks can influence interest rates through their monetary policy decisions, which include changes in the policy rate or reserve requirements.
- A is true but R is false
- A is false but R is true
- Both A and R are true and R explains A
- Both A and R are true but R does not explain A
…………… is/are the main types of bank accounts.
- Current
- Recurring
- Fixed deposit accounts
- All of these
A bank offers the following options to its customers:
- Fixed Deposit Account: 7% interest, withdrawal only after maturity.
- Savings Account: 4% interest, withdrawal anytime.
- Recurring Deposit Account: 6% interest, regular monthly deposits.
Which account type should a customer choose if they need to withdraw money regularly and also want to maximize interest?
- Fixed Deposit Account
- Savings Account
- Recurring Deposit Account
- None of the above