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Answer : 2. "decrease"
What would be the effect on the cash reserves of commercial banks if RBI sells the securities?
5Q:
What would be the effect on the cash reserves of commercial banks if RBI sells the securities?
- 1increase or decreasefalse
- 2decreasetrue
- 3increasefalse
- 4No effectfalse
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Answer : 2. "decrease"
Explanation :
If RBI conducts a sale of securities, it absorbs liquidity in the economy thereby reducing Cash Reserves in commercial banks.