Question

The process by which rbi or any central bank protects the economy against adverse economic shocks is known as

Answer 1

Answer:

Well, It's Sterilization.

Explanation:

The process by which RBI or any central bank protects the economy against adverse economic shocks is known as Sterilization. The bank does this by limiting the inflow and outflow of capital on the money supply. It usually included selling or buying of assets.

Thus, when RBI withdraws the money from the financial system, it helps in stabilizing the effect of new money that is entering.