Question : When the credit creation capacity of the commercial banks is likely to fall ?  
 

Option 1: When the central bank sells securities in the market, 
 

Option 2: When the commercial bank sells securities in the market, 
 

Option 3: When the Local bank sells securities in the market, 
 

Option 4: All of the above. 
 

Question : The discount rate is the interest rate at which:

Option 1: Commercial banks borrow from the central bank
  

Option 2: Commercial banks lend to the central bank
    

Option 3: The government borrows from the central bank

Option 4: The central bank lends to the government

Question : The discount rate is the interest rate at which:

Option 1: Commercial banks borrow from the central bank
   

Option 2: Commercial banks lend to the central bank
  

Option 3: The government borrows from the central bank

Option 4: The central bank lends to the government

Question : Which of the following statement are true?

1. Sale of securities through open market operations reduces the reserves of commercial banks.
2. Purchase of securities by central bank increase the the reserves and raises the banks ability to give credit.

Option 1: Both are true.
 

Option 2: Both are false.
 

Option 3: Statement 1 is true, statement 2 is false.
 

Option 4: Statement 1 is false, statement 2 is true.
 

Question : To reduce credit availability in the economy, the Central bank may___

Option 1: Buy securities in the open market
 

Option 2: Sell securities in the open market
 

Option 3: Reduce reserve ratio

Option 4: Reduce the repo rate