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When the RBI wants to inject liquidity int economy it may adopt the following :
1. Buy the government securities from the banks .
2. Enter into reverse Operations
3. Raises cash Reserve Ration
4 Reduce SLR.
Select the correct answer using the codes given below :
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- l only
- 1 and 4 only
- 1, 2 and 4 only
- 1, 2 , 3 and 4
Correct Option: B
By Buying the government securities from the banks and reducing SLR may inject money into the system. However Raising cash Reserve Ratio may take away liquidity from the market as the banks. will have to deposite more money with the RBI and similarly entering the revers repo operations may also take away liquidity from the market .
