Question:
Which of the following is a quantitative tool of the Reserve Bank of India (RBI)?
Which of the following is a quantitative tool of the Reserve Bank of India (RBI)?
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Quantitative tools are like a "volume knob"—they turn the entire economy's money supply up or down. Qualitative tools are like a "spotlight"—they focus on specific areas.
Updated On: May 30, 2026
- Moral Suasion
- Margin Requirement
- Bank Rate
- Credit Rationing
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The Correct Option is C
Solution and Explanation
Step 1: Understanding the Concept:
Monetary policy tools used by the RBI are divided into two categories: Quantitative (affecting the overall volume of money) and Qualitative (affecting the direction of credit).
Step 2: Detailed Explanation:
• Quantitative Tools: These include Repo Rate, Reverse Repo Rate, CRR, SLR, and Bank Rate. They affect all sectors of the economy equally by changing the total money supply.
• Qualitative (Selective) Tools: These include Moral Suasion, Margin Requirements, and Credit Rationing. They are used to control credit for specific sectors (like luxury goods or agriculture).
Step 3: Final Answer:
Bank Rate is a quantitative tool.
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