A programme of action by the Central Bank to regulate and control the flow of credit within the economy is know as:Question 10Answera.Direct policyb.Long term policyc.Monetary policyd.Fiscal policy
Question
A programme of action by the Central Bank to regulate and control the flow of credit within the economy is know as:Question 10Answera.Direct policyb.Long term policyc.Monetary policyd.Fiscal policy
Solution
The correct answer is c. Monetary policy.
Monetary policy refers to the actions undertaken by a nation's central bank to control money supply and achieve goals that promote sustainable economic growth. This policy is used to regulate and control the flow of credit within the economy. It involves management of money supply and interest rate, aimed at achieving macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.
Direct policy and long term policy are not standard terms used in economics. Fiscal policy, on the other hand, is related to government revenue and expenditure, but it does not involve the regulation of credit flow in the economy. Therefore, the correct answer is Monetary policy.
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