CMA Foundation · Fundamentals of Business Economics and Management · Money and Banking
Which of the following is a selective (qualitative) credit control measure of a central bank rather than a quantitative one?
Fixing margin requirements on loans against specific securities is a selective credit control. It targets credit for particular uses. Bank rate, open market operations and CRR changes influence overall credit volume, so they are quantitative controls.
- ABank rate change
- BOpen market operations
- CFixing margin requirements on loans against specific securitiesCorrect
- DVariation in the Cash Reserve Ratio
Explanation
Selective controls regulate credit for particular purposes or sectors, such as margin requirements on loans against shares or commodities. Bank rate, open market operations and CRR affect the total volume of credit in the economy and are quantitative tools.
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