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Economy2020
If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do?
  1. Cut and optimise 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:

Explanation

Option 2, "Increase the Marginal Standing Facility Rate," is correct because an expansionist monetary policy aims to increase liquidity in the economy, which generally involves lowering interest rates to encourage borrowing and investment. By increasing the Marginal Standing Facility Rate, the RBI would be making borrowing more expensive for banks, contradicting the goals of expansionary policy, which seeks to stimulate economic activity by making credit more accessible. Hence, this action would not align with the objectives of an expansionist stance.

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