New One Goal, Three Exams: Strategies for Mastering RBI, SEBI, and IFSCA Exams
Register

Question

Which of the following things will RBI do if it has to combat raising inflation?  

A Sell government securities Correct Answer Incorrect Answer
B increase reserve ratios Correct Answer Incorrect Answer
C Increasing bank rate Correct Answer Incorrect Answer
D Only 2 and 3 Correct Answer Incorrect Answer
E All 1, 2 and 3 Correct Answer Incorrect Answer

Solution

RBI has to sell government securities, increase bank rate, increase policy rate, etc, so that banks have left less money to lend then people borrow less, demand goes down and the result of it is the prices of goods and services also goes down. This is how, RBI decreases the inflation rate.  

Practice Next

Relevant for Exams:

×
×