Question :
Variations in the Cash Reserve Ratio and Open Market Operations are instruments of:
Option 1:
Budgetary policy
Option 2:
Trade policy
Option 3: Fiscal policy
Option 4: Monetary policy
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Correct Answer: Monetary policy
Solution : The correct option is Monetary policy .
Monetary policy tools include changes in the Cash Reserve Ratio (CRR) and Open Market Operations (OMO). Central banks, such as the Federal Reserve in the United States or the Reserve Bank of India in India, can regulate an economy's money supply and interest rates by implementing monetary policy.
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