Question

What the true about SLR (statutory Liquidity Ratio)?   i. The SLR is determined by a percentage of net demand and time liabilities ii. These are investment in form of gold and government approved securities iii. RBI uses SLR as a monetary tool to control the inflation and decreases SLR when inflation is high 

A Only i and ii Correct Answer Incorrect Answer
B Only i & iii Correct Answer Incorrect Answer
C Only ii & iii Correct Answer Incorrect Answer
D All of the above Correct Answer Incorrect Answer
E None of these Correct Answer Incorrect Answer

Solution

RBI will increase (not decrease) SLR to control high inflation. Increase in SLR will reduce the money supply in the system.

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