Write short notes on:
3. Central Bank's measure of regulation of consumer credit
Answer:
Consumer credit refers to the credit that is used by the consumers to buy consumer durable goods such as laptops, mobiles, cars etc. An increase in the amount of this credit will lead to an increase in the demand for goods. With the production of goods remaining unchanged, this increase in demand will result in a shortage of goods. Similarly, a decrease in the amount of this credit will result in a decrease in the demand for goods, causing supplies to remain unsold. Thus, the Central Bank's measure of regulation of consumer credit is used to regulate the amount of consumer credit that can be granted to ensure that the production or inventories are not affected.
