Lowering the Cash Reserve Ratio, it will have the following impact on the economy: I. Banks will have higher liquidity leverage. II. The economy may see increased investment. III. Supply of currency in the economy may broaden. IV. Real investment rate may decline. Select the correct code :

Question

CIVILSHUB IAS · Accepted Answer

None of the above / More than one of the above. Reducing the Cash Reserve Ratio (CRR) increases liquidity with banks, which can lead to a fall in interest rates, an increase in lending and investment, and an increase in money supply in the economy. Hence, statements I, II and III are true.

Lowering the Cash Reserve Ratio, it will have the following impact on the economy: I. Banks will have higher liquidity leverage. II. The economy may see increased investment. III. Supply of currency in the economy may broaden. IV. Real investment rate may decline. Select the correct code :

Explanation