Question

Which of the following statements is not correct with respect to the correction of Deficient Demand?

Options

• Government reduces the taxes.

• The Central Bank increases the bank rate.

• The Central Bank reduces the CRR and SLR.

• The Government increases its spending.

Answer 1

The Central Bank increases the bank rate.

Explanation:

Credit must be liberalised in the event of a lack of demand. It can be accomplished by lowering bank rates, causing commercial banks to lower their lending rates, thereby increasing the availability of credit in the economy.