Q14 of 39 Page 1

In order to encourage investment in the economy, the Central Bank may

___________. (Choose the correct alternative)


(a) Reduce Cash Reserve Ratio


(b) Increase Cash Reserve Ratio


(c) Sell Government securities in open market


(d) Increase Bank Rate


(a) Reduces Cash Reserve Ratio

Reducing CRR will lead to more money in the hands of bank which it can lend further. This will lead to increase in investments.


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