To control inflation and tackle the problem of exchange liquidity due to foreign exchange inflows, the RBI
A)Sells government securities.
B)Purchase securities
C)Decrease bank rate.
D)Raise interest rate.

Question

Quizplus · Accepted Answer

Selling government securities is a tool used by the RBI to absorb excess liquidity from the market, which can help control inflation and manage foreign exchange inflows.

To Control Inflation and Tackle the Problem of Exchange Liquidity