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Read the following statements carefully: Statement 1: During deflationary gap, the Central Bank of a country may increas…

Q1

Read the following statements carefully:
Statement 1: During deflationary gap, the Central Bank of a country may increase the repo rate.
Statement 2: The government can reduce the deflationary gap by purchasing Government Securities (G-Sec) in the open market.

a

Statement 1 is true and Statement 2 is false.

b

Statement 1 is false and Statement 2 is true.

c

Both Statements 1 and 2 are true.

d

Both Statements 1 and 2 are false.

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