SSC CPO 2024 PYQ — Question 54

The correct answer is Option 4 i.e. Credit rationing.

Credit rationing is a selective credit instrument used to limit the amount of credit available to certain sectors or borrowers. By imposing such limits, central banks or financial authorities can direct resources toward preferred areas of the economy or manage inflation.

This approach helps control the allocation of credit in a targeted manner, ensuring that specific sectors receive the necessary financial support while curbing excessive lending in other areas. Thus, credit rationing serves as a tool to influence economic activity and maintain financial stability.