Multiple choice

If the cash reserve ratio is lowered by the RBI, it' s impact on credit creation will be

  1. Increase it

  2. Decrease it

  3. No impact

  4. None of the other

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Cash Reserve Ratio (CRR) is the portion of deposits banks must hold with the RBI. Lowering the CRR releases more funds for banks to lend, thereby increasing credit creation.