Q. With reference to the tools available to the Reserve Bank of India (RBI) for controlling inflation, consider the following actions:

1. Increase in the Bank Rate
2. Increase in Reserve Ratio Requirements
3. Purchase of securities in the open market
4. Increase in the Repo Rate

Which of the above actions will not help RBI in controlling inflation in India?
Answer: Only 3
Notes: Open market purchase of securities by RBI infuses liquidity into the economy, which tends to raise the money supply and may fuel inflation rather than curb it. On the other hand, increasing the Bank Rate, Reserve Ratio Requirements, or Repo Rate are contractionary measures designed to reduce liquidity and help control inflationary pressures.