Assertion (A): In a slump, the RBI buys government securities.
Reason (R): Purchases add reserves to banks, which can then lend more.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

More lending raises spending and helps close a deflationary gap. R explains A.

Concept: OMO purchases in a slump
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsMonetary measures

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Assertion (A): In a slump, the RBI buys government securities.Reason (R): Purchases add reserves to banks, which can then lend more.

Explanation

Assertion (A): In a slump, the RBI buys government securities.
Reason (R): Purchases add reserves to banks, which can then lend more.