Which of the following is a quantitative tool of monetary policy?
Practice Questions
Q1
Which of the following is a quantitative tool of monetary policy?
Moral suasion
Open market operations
Bank rate
Cash Reserve Ratio
Questions & Step-by-Step Solutions
Which of the following is a quantitative tool of monetary policy?
Step 1: Understand what monetary policy is. It is how a country's central bank controls the money supply and interest rates.
Step 2: Learn about quantitative tools of monetary policy. These are methods used to control the amount of money in the economy.
Step 3: Identify the Cash Reserve Ratio (CRR). It is the percentage of a bank's total deposits that must be kept in reserve with the central bank.
Step 4: Recognize that the CRR affects how much money banks can lend. If the CRR is high, banks have less money to lend; if it is low, they can lend more.
Step 5: Conclude that the CRR is indeed a quantitative tool of monetary policy because it directly influences the lending capacity of banks.
