Question :
Which one of the following is not a qualitative control of credit by the Central bank of a country?
Option 1:
Rationing of credit
Option 2:
Regulation of consumer credit
Option 3: Variation of margin requirements
Option 4: Regulation of margin requirements
Correct Answer: Variation of margin requirements
Solution : The correct option is Variation of margin requirements.
Margin requirement adjustments are a quantitative control used by central banks. They involve specifying the amount an investor must deposit to buy securities on margin.This affects credit availability in financial markets. Qualitative controls focusses on directing credit by setting criteria for loans or adjusting lending terms.
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