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WBCS Main Examination 2023 — Paper V: Indian Constitution and Economy · Question 165 of 200

Q165
Indian EconomyMoney, Banking & Financial Institutions
In order to increase money supply, which of the following does the Reserve Bank pursue?
  1. a.Reduction in the Cash Reserve Ratio
  2. b.Increase in the Statutory Liquidity Ratio
  3. c.Increase in the Repo Rate
  4. d.Restriction of credit in selective sectors

Answer: (A) Reduction in the Cash Reserve Ratio

Cutting the Cash Reserve Ratio frees more of banks' deposits for lending and so increases money supply. Raising SLR or the repo rate and restricting selective credit all reduce money supply.

Q164 Whole paperQ166