3.4 - Policy Tools to Control Money Supply
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Practice Questions
Test your understanding with targeted questions
What is the Cash Reserve Ratio?
💡 Hint: Think about how banks manage their deposits.
What is the effect of the RBI buying government bonds?
💡 Hint: Consider what happens to bank reserves when bonds are bought.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What does CRR stand for?
💡 Hint: It's a key regulatory requirement.
True or False: Open Market Operations only involve selling bonds.
💡 Hint: Consider how central banks manage money supply.
1 more question available
Challenge Problems
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A sudden economic downturn occurs. Discuss how the RBI might utilize both quantitative and qualitative tools effectively, providing specific examples.
💡 Hint: Think about liquidity needs versus lending behavior.
Describe a scenario where the RBI's role as a lender of last resort becomes critical. What measures are put in place to prevent bank runs?
💡 Hint: Consider what builds public confidence in the banking system during crises.
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