Advertisements
Advertisements
Question
Answer with reason, whether you agree or disagree with the following statement.
The Central bank has control over credit creation.
Solution
We agree with the given statement.
Although it is the commercial banks that create the credit money but the central bank controls the volume of credit created. Credit control refers to the control on the quantum of credit and the direction of its flow in the economy. This is done to achieve growth with stability. Therefore, we can say that credit control is the function of the central bank of a country. The Central Bank can use various quantitative and qualitative measures for controlling credit in the economy. The following are some of the tools to control credit flow:
Quantitative measures:
i. Bank rate
ii. Open market operations
iii. Varying reserve ratio or Cash reserve ratio Qualitative measures:
i. Issue of directives
ii. Moral suasion
iii. Direct Action
APPEARS IN
RELATED QUESTIONS
Overdraft facility is provided to saving account holders.
Bank rate is a quantitative measure of credit control.
Bank rate is a quantitative measure of credit control.
Match the following:
| Group 'A' | Group 'B' |
| (1) Adam Smith | (1)Private monopoly |
| (2) Railway | (2) Father of economics. |
| (3) Legal tender money | (3) Public monopoly |
| (4) D-mat account | (4) Principles of economics |
| (5) Bank rate | (5)Buying and selling of shares. |
| (6) Quantitative tool of credit control. | |
| (7) Fiat money | |
| (8) Selective method of credit control |
Define or explain the concept of Overdraft .
Write explanatory note:
Qualitative credit control methods of the Central Bank.
State with reason whether you agree or disagree with the following statement.
Credit control is the function of the Central Bank of the country.
Answer in detail.
What are the qualitative measures of credit control?
Answer in detail.
Explain Regulation of consumer credit as a qualitative measure of the Central Bank of India.
