Questions and Answers
What is the primary purpose of open market operations?
To influence the money supply in the economy
What happens to the money supply when the RBI increases the reserve ratio?
It decreases
What is the name of the tool used by the RBI to persuade commercial banks to discourage or encourage lending?
Moral suasion
What is the effect on lending by banks when the RBI changes the reserve ratio?
Signup and view all the answers
What is the purpose of the RBI buying government bonds in the open market?
Signup and view all the answers
What is the name of the tool used by the RBI to control the extent of money supply by changing the bank rate?
Signup and view all the answers
What is the effect of a cheque issued by the RBI on the money supply?
Signup and view all the answers
What is the result of the RBI selling a bond to private individuals or institutions?
Signup and view all the answers
What is the characteristic of outright open market operations?
Signup and view all the answers
What is the purpose of changing the bank rate by the RBI?
Signup and view all the answers
What is the rate at which the RBI lends money to commercial banks?
Signup and view all the answers
What is the purpose of repo and reverse repo operations conducted by the RBI?
Signup and view all the answers
