Question

Controlling inflation in the economy is mainly achieved through:

• A. Issue of currency notes
• B. Banker’s bank
• C. Credit control
• D. Custodian of foreign exchange

Answer 1

Answer:

C. Credit control

RBI uses monetary policy tools like repo rate, reverse repo rate, cash reserve ratio (CRR), and open market operations to regulate money supply and credit. By controlling the availability of credit and liquidity, RBI can check excessive spending, thus controlling inflation.