Which of the following actions would the central bank most likely take to combat inflationary pressure in the economy?

CA Foundation · Business Economics · MTP · January 2025
Which of the following actions would the central bank most likely take to combat inflationary pressure in the economy?
(A) A. Decrease the interest rate
(B) B. Increase the money supply
(C) C. Raise the reserve ratio for commercial banks
(D) D. Lower the statutory liquidity ratio

Suggested Answer and Working Notes:

Correct Answer: Option (C)

C. Raise the reserve ratio for commercial banks

Topics: Money Market

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