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Model Paper 2 — Economics STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceEconomicsModel Paper 24 Marks
Question
What is monetary policy? State any three instruments of monetary policy.
✓

Answer

Monetary Policy: It is the policy of correcting excess or deficient demand in the economy by controlling the supply of credit.
The three instruments of monetary policy include,
i. Open market Operations: It refers to the sale and purchase of securities and bonds by the central bank in the open market.
ii. Cash Reserve Ratio (CRR): It refers to the ratio between "cash reserve of the commercial bank with RBI" and their total deposits.
iii. Margin Requirement: It is the difference between the amount of loan granted and the current value of security offered for loans.

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