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The most powerful tool used by the Reser...

The most powerful tool used by the Reserve Bank of India to control inflation is to

A

(a)Repo rate

B

(b)Statutory Liquidity Ratio

C

(c)Marginal Adjustment Facility

D

(d)Only (a) and (d)

Text Solution

Verified by Experts

The correct Answer is:
D
Repo rate is the rate at which the central bank of a country (RBI in case of India) lends money to commercial banks in the event of any shortfall of funds, thereby controlling liquidity. Repo rate is used by monetary authorities to control inflation. Repo and reverse repo rates from a part of the liquidity adjustment facility.
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