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      Question

      To help the country’s credit situation, the RBI

      may:
      A Repo Rates Should Be Reduced Correct Answer Incorrect Answer
      B Purchase stocks and bonds in the open market. Correct Answer Incorrect Answer
      C Reduce the cash reserve to debt ratio. Correct Answer Incorrect Answer
      D Sell securities in the open market Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      Selling security on the open market decreases a commercial bank’s deposit base. Additionally, it limits lending capability.

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