Correct answer: (b) 2 and 3 only
Explanation
- A
1 and 2 only
1 and 2 only. If inflation is high, RBI sells (not buys) G-secs to suck out rupees.
- B
2 and 3 only
2 and 3 only. A falling rupee: sell dollars. Lower US/EU rates: capital inflows, RBI buys dollars to lean against a surge.
- C
1 and 3 only
1 and 3 only. Statement 1 is the wrong OMO direction.
- D
1, 2 and 3
All three. Buying G-secs is easing, not a high-inflation response.
Summary. Official key is (b) 2 and 3 only. High inflation calls for tightening — RBI sells securities, it does not buy them. A rapidly falling rupee is met by selling dollars. A fall in US/EU rates draws money into India; RBI often buys dollars to keep the rupee from jumping.
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