What is CRR and how does it control?
CRR is the amount the commercial banks need to maintain with the RBI.
So if CRR is increased by RBI,so banks will have less money with them. So there will be lesser money in circulation. Hence less the money with people, correspondingly demand of goods will go down.
As demand of goods will go down, so inflation will come down.
CRR is the amount the commercial banks need to maintain with the RBI.
So if CRR is increased by RBI,so banks will have less money with them. So there will be lesser money in circulation. Hence less the money with people, correspondingly demand of goods will go down.
As demand of goods will go down, so inflation will come down.
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