Q. Money supply in the economy is controlled by which of the following measure/measures?
1.Bank rate
2.Open market operations
3.Variations in reserve ratios
Choose the correct answer from below given codes:

[A] 1 only

[B] 1 and 2 only

[C] 2 and 3 only

[D] 1, 2 and 3

Answer: D

Explanation: Central Bank is a very important institution in a modern economy. Almost every country has one central bank.

  • India got its central bank in 1935. Its name is the ‘Reserve Bank of India’. Central bank has several important functions. It issues the currency of the country.
  • It controls money supply of the country through various methods, like bank rate, open market operations and variations in reserve ratios.

Source: NCERT – Macro economics