Q. Which of the following is/are quantitative method of control of money supply in the economy by Reserve Bank of India?
1.Bank Rate
2.Moral suasion
3.Margin requirement
Choose the correct answer from below given codes:

[A] 1 only

[B] 1 and 2 only

[C] 1 and 3 only

[D] 1, 2 and 3

Answer: A
Notes:

Explanation: The RBI controls the money supply in the economy in various ways. The tools used by the Central bank to control money supply can be quantitative or qualitative.

  • Quantitative tools control the extent of money supply by changing the CRR, or bank rate or open market operations.
  • Qualitative tools include persuasion by the Central bank in order to make commercial banks discourage or encourage lending which is done through moral suasion, margin requirement, etc.

Source: NCERT – Macro economics