Question : ________ is exercised through discussions, letters, and speeches to banks.
Option 1: Moral suasion
Option 2: Selective credit control
Option 3: Margin requirement
Option 4: Open market operation
Correct Answer: Moral suasion
Solution : The correct answer is (a) Moral suasion.
Moral suasion is a non-coercive policy tool used by central banks to influence the behavior of commercial banks. It is often exercised through discussions, letters, and speeches to banks. The central bank may, for example, urge banks to lend less money to businesses or individuals, or to lend at higher interest rates.
Selective credit control, margin requirement, and open market operation are all quantitative tools used by central banks to control the money supply. They are not exercised through discussions, letters, and speeches to banks.
Question : Which of the following is not a tool of quanlitative instruments of monetary policy?
Option 1: Open market operations
Option 2: Margin requirements
Option 3: Moral suasion
Option 4: Selective credit control.
Question : __________________ refers to difference between the market value of security offered and the value of amount lent.
Option 1: Margin requirements
Option 2: Moral suasion
Option 3: Open market operations
Option 4: Repo rate.
Question : ______________________is a combination of persuasion and pressure that central bank applies on other banks in order to get them in line with the policy.
Option 4: Bank rate.
Question : _____ refers to a method adopted by the Central Bank to persuade or convince commercial banks to advance credit in the economic interest of the country.
Option 1: Marginal Standing Facility
Option 2: Moral Suasion
Option 3: Credit Rationing
Option 4: Margin Requirements
Question : Which RBI tool refers to the buying and selling of bonds issued by the Government in the open market?
Option 1: Liquidity adjustment facility
Option 3: Marginal standing facility
Option 4: Open market operations
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