Ans – (a)
Cash Reserve Ratio (CRR):
It refers to the minimum percentage of net demand and time liabilities, to be kept by commercial banks with the central bank.
A change in CRR affects the ability of commercial banks to create credit.
For instance, a decrease in CRR increases the excess reserves of commercial banks and increases their credit-creating power.
As loans are available at a low interest rate. it will encourage businesses and investors to take loans for investment purposes.
An increase in CRR will have the opposite effect.