Is open market operation a qualitative or quantitative instrument of credit control?
Elaborate how this can be used under the situation of excess demand?
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Explanation:
Credit control is an important tool used by Reserve Bank of India, a major weapon of the monetary policy used to control the demand and ..
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it is quantitative instrument used by central bank to control money supply in an economy.
- under excess demand i. e. inflation, central bank offers their securities to general public and banks and soaks money from them which leads to decline in credit creation capacity of commercial banks and decline in money held by people accordingly excess demand controlled
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