Multiple choice

Increase in CRR helps in sucking the excess liquidity in the economy.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

CRR (Cash Reserve Ratio) is a monetary policy tool. When RBI increases CRR, banks must keep more funds with RBI as reserves, reducing their lending capacity. This effectively sucks out excess liquidity from the economy and helps control inflation.

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