The correct answer is Both A and B. Explanation & Key Takeaways: • Increase CRR: • This is a measure to reduce the liquidity in the market by increasing the percentage of deposits that banks have to keep with the RBI. • This reduces the amount of money available for lending and thereby reduces inflationary pressure. • Increase Repo Rate: • This is a measure to increase the cost of borrowing for banks, which in turn increases the cost of lending for customers. • This reduces the demand for loans and thereby reduces inflationary pressure. • CRR stands for Cash Reserve Ratio, which is the percentage of deposits that banks have to keep with the RBI. • Repo Rate is the rate at which the RBI lends money to commercial banks for short periods. Related Concepts: • Other measures that RBI may adopt to combat inflation include: • Open market operations: • RBI can sell government securities in the open market to reduce the money supply in the economy. • Increase in bank rate: • This is the rate at which RBI lends to commercial banks. • An increase in this rate increases the cost of borrowing for banks and reduces the money supply in the economy. • Fiscal measures: • The government can increase taxes or reduce spending to reduce the demand for goods and services, thereby reducing inflationary pressure.