Multiple choice

Which of the following is/are the measure(s) taken by the Reserve Bank of India (RBI) to ease the liquidity crunch in the country?

(a) Cut in Cash Reserve Ratio and Statutory Liquidity Ratio. (b) Increase the flow of foreign direct investment. (c) Supply of additional currency notes in the market.

  1. Only (a)

  2. Only (b)

  3. Only (c)

  4. All (a), (b) and (c)
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A Correct answer
Explanation

The RBI manages liquidity primarily through monetary policy tools like the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). FDI flow is influenced by government policy, and printing more notes is not a standard liquidity management tool.

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