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?
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?
[A]An increase in the Bank Rate
[B]An increase in the Reserve Ratio Requirements
[C]A purchase of securities in the open market
[D]Increasing the Repo Rate
A purchase of securities in the open market
When RBI purchases the securities, RBI is effectively releasing liquidity in the market. Increased liquidity will increase inflation.
Categories: Banking Awareness / Structure & Functions of RBI
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