Discussion
Which of the following is a measure of selective credit control
Answer: D
Correct answer: None of the above
None of the three named instruments is selective. Bank rate policy, the cash reserve ratio and open market operations are all general, or quantitative, controls: they act on the total volume of credit in the system without distinguishing between its uses.
Selective, or qualitative, controls direct credit towards or away from particular purposes - margin requirements on advances against specified commodities, ceilings on credit for particular sectors, differential interest rates, and moral suasion. The distinction is between controlling how much credit there is and controlling where it goes.
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