Question

Which of the following statements are true ?
(A) Quantitative tools control the extent of money supply by changing the CRR.
(B) There are two types of open market operations – outright and upright.
(C) A fall in the bank rate can decrease the money supply.
(D) Selling of a bond by RBI leads to reduction in quantity of reserves.
(E) The RBI can influence money supply by changing the rate at which it gives loan to the commercial
banks.
Choose the correct answer from the options given below :

• A. (A), (C) and (D) only
• B. (A), (B) and (D) only
• C. (B), (D) and (E) only
• D. (A), (D) and (E) only

Answer 1

Answer: (D)

(A), (D) and (E) only

Answer 2

CRR is a key tool, selling bonds reduces reserves, and the RBI influences supply by changing lending rates to banks. "Upright" operations do not exist.