Which set of measures would the RBI use to fight inflation caused by excess demand?

Raise the repo rate, raise the CRR and sell government securitiesCorrect answerYour answerCut the repo rate, cut the CRR and buy government securitiesCorrect answerYour answerCut the repo rate and raise the CRRCorrect answerYour answerLower margin requirements and buy government securitiesCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

All three make credit costlier or scarcer, which reduces spending.

Concept: Tight monetary policy
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsEasing and tightening

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Which set of measures would the RBI use to fight inflation caused by excess demand?

Explanation