Q. Many a times we read in the newspapers that RBI takes certain steps to curb the menace of Inflation. In this context, which among the following will not help RBI in controlling the inflation in the country?
Answer: A purchase of securities in the open market
Notes: The correct answer is "A purchase of securities in the open market." This action, known as open market operations, typically injects liquidity into the economy, which can actually stimulate spending and potentially increase inflation. In contrast, increasing the Bank Rate, Reserve Ratio Requirements, or Repo Rate are contractionary measures that help reduce money supply and curb inflation. The Reserve Bank of India (RBI) uses these tools to manage inflation, which is a key aspect of its monetary policy.