Civil Services Examination · Question 57
If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do? 1. Cut and optimize the Statutory Liquidity Ratio 2. Increase the Marginal Standing Facility Rate 3. Cut the Bank Rate and Repo Rate Select the correct answer using the code given below:
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Answer: (B) 2 only
Explanation
An expansionary policy lowers SLR, bank rate and repo rate; raising the MSF rate would tighten liquidity.