[amp_mcq option1=”sell securities in the open market and hike the Cash Reserve Ratio” option2=”buy securities from the open market and lower the Cash Reserve Ratio” option3=”buy securities from the open market and hike the Cash Reserve Ratio” option4=”sell securities in the open market and lower the Cash Reserve Ratio” correct=”option1″]<\/p>\n
The correct answer is: A. sell securities in the open market and hike the Cash Reserve Ratio<\/strong>.<\/p>\n The Central Bank of a country can control credit and investment by using open market operations, which are the buying and selling of government securities in the open market. When the Central Bank sells securities, it takes money out of circulation, which makes it more expensive for banks to lend money. This reduces the amount of credit available and slows down economic activity. When the Central Bank buys securities, it puts money into circulation, which makes it cheaper for banks to lend money. This increases the amount of credit available and speeds up economic activity.<\/p>\n The Cash Reserve Ratio is the percentage of deposits that banks are required to keep on hand. When the Central Bank raises the Cash Reserve Ratio, banks have less money available to lend. This reduces the amount of credit available and slows down economic activity. When the Central Bank lowers the Cash Reserve Ratio, banks have more money available to lend. This increases the amount of credit available and speeds up economic activity.<\/p>\n In order to control credit and investment, the Central Bank should sell securities in the open market and hike the Cash Reserve Ratio. This will take money out of circulation and make it more expensive for banks to lend money. This will reduce the amount of credit available and slow down economic activity.<\/p>\n Here is a brief explanation of each option:<\/p>\n [amp_mcq option1=”sell securities in the open market and hike the Cash Reserve Ratio” option2=”buy securities from the open market and lower the Cash Reserve Ratio” option3=”buy securities from the open market and hike the Cash Reserve Ratio” option4=”sell securities in the open market and lower the Cash Reserve Ratio” correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[699],"tags":[],"class_list":["post-33282","post","type-post","status-publish","format-standard","hentry","category-banking-and-financial-institutions","no-featured-image-padding"],"yoast_head":"\n\n