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Dicuss howthe central bank plays the role of 'controller of credit' in an economy ? |
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Answer» SOLUTION :Thisis the mostcrucialfunctionplayedby any CENTRAL Bankin themodern times. Central Bank are supposedto regulate and controlthe volumeand directionof thecreditby using: (i) Quantitative Quantitative Techniques: These are these techniques which INFLUENCE the quantum of credit In the economy like open MARKET operations bank rate policy, rape and reverse repo rate policy, etc (ii)Qualitative Techniques or Selective Credit Control techniques are the ones which influence the direction of credit' In the economy, like margin requirements and MORAL suasion. |
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