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221

Q:

What would be the effect on the cash reserves of commercial banks if RBI sells the securities?

  • 1
    increase or decrease
  • 2
    decrease
  • 3
    increase
  • 4
    No effect
  • Show Answer
  • Workspace

Answer : 2. "decrease"
Explanation :

If RBI conducts a sale of securities, it absorbs liquidity in the economy thereby reducing Cash Reserves in commercial banks.

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Basic GK Economics GK

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