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Money and Banking — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsMoney and Banking1 Mark
Question
Assertion (A): Quantitative tools include persuasion by the central bank in order to make commercial banks discourage or encourage lending.
Reason (R): Quantitative tools control the extent of the money supply by changing the Cash Reserve Ratio (CRR) or Statutory Liquidity Ratio (SLR) or Bank Rate or Repo Rate or Reverse Repo Rate, or through Open market operations (OMO).
Alternatives:-
a) Both Assertions (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
✓

Answer

d) Explanation:- Quantitative tools are not the persuasive (Suggestive) tools. Thease are the hard core rules in quantity form that has to be followed as these are laid out by central bank. Thus Assertion is false. Quantitative measures comprises of Bank Rate, Repo Rate, Reserve Repo Rate, etc. Thus Reason is true.

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