If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do ? 1. Cut and optimize the Statutory Liquidity Ratio 2. Increase the Marginal Standing Facility Rate 3. Cut the Bank Rate and Repo Rate Select the correct a

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Q: (IAS/2020)
If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do ?
1. Cut and optimize the Statutory Liquidity Ratio
2. Increase the Marginal Standing Facility Rate
3. Cut the Bank Rate and Repo Rate

Select the correct answer using the code given below :

question_subject: 

Economics

question_exam: 

IAS

stats: 

0,100,147,21,100,95,31

keywords: 

{'expansionist monetary policy': [0, 0, 0, 1], 'statutory liquidity ratio': [0, 0, 1, 0], 'rbi': [1, 4, 2, 23], 'bank rate': [0, 1, 1, 2], 'marginal standing facility rate': [0, 0, 0, 1], 'repo rate': [0, 0, 1, 1]}

The correct answer is b.

If the RBI decides to adopt an expansionist monetary policy, it would not increase the Marginal Standing Facility Rate as it is a tool used by the RBI for controlling short-term credit. An expansionist monetary policy aims to boost economic growth by increasing liquidity in the system, which is done by cutting the Bank Rate and Repo Rate, and optimizing the Statutory Liquidity Ratio.

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