Explain the following functions of the Central Bank.
(i) Banker to the government.
(ii) Controller of money supply using the instrument of open market operations.
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Answer:
1). banker to the government.
Explanation:
Central Bank has monopoly of issuing notes and thereby can control the volumes of currency. ... It controls credit and money supply by adopting quantitative measures and qualitative measures, namely, (i) Bank Rate, (ii) Open Market Operations, and (iii) CRR which influence credit availability and credit creation.
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