Reserve Bank of India has increased the bank rate and cash reserve rat

1.	Reserve Bank of India has increased the bank rate and cash reserve ratio in, June 2008 to control inflationary tendencies in the Indian economy. How ever this effort of RBI became ineffective
Answer» (a) Value of certain products went up and the petroleum prices increased. As a result of it RBI’s efforts to regulate the inflationary pressure failed. Thus monetary policy resulted ineffective. (b) In additional to monetary measures like CRR and bank rate policy, various other measures can be adopted to regulate the economy. Taxation and expenditure policy can be used by the government. Similarly government may provide subsidy or can introduce price ceiling and support prices.

Reserve Bank of India has increased the bank rate and cash reserve ratio in, June 2008 to control inflationary tendencies in the Indian economy. How ever this effort of RBI became ineffective

Answer»

(a) Value of certain products went up and the petroleum prices increased. As a result of it RBI’s efforts to regulate the inflationary pressure failed. Thus monetary policy resulted ineffective.

(b) In additional to monetary measures like CRR and bank rate policy, various other measures can be adopted to regulate the economy. Taxation and expenditure policy can be used by the government. Similarly government may provide subsidy or can introduce price ceiling and support prices.

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Reserve Bank of India has increased the bank rate and cash reserve ratio in, June 2008 to control inflationary tendencies in the Indian economy. How ever this effort of RBI became ineffective

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