If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do ? 1. Cut and optimize the Statutory Liquidity Ratio 2. Increase the Marginal Standing Facility Rate 3. Cut the Bank Rate and Repo Rate Select the correct answer using the code given below:

1. An expansionist monetary policy aims to increase the money supply in the economy to stimulate growth, typically by making credit cheaper and more available. 2. Statement 1: Cutting the Statutory Liquidity Ratio (SLR) means banks have to hold a smaller portion of their deposits as mandated liquid assets. This frees up more funds for banks to lend, thus increasing the money supply. This is an expansionary measure. So, the RBI *would* do this (or optimize it downwards). 3. Statement 2: Increasing the Marginal Standing Facility (MSF) Rate makes borrowing from the RBI under the MSF window more expensive for banks. This discourages borrowing and lending, acting as a contractionary measure. Therefore, the RBI would *not* increase the MSF Rate when adopting an expansionist monetary policy. 4. Statement 3: Cutting the Bank Rate and Repo Rate lowers the cost at which banks borrow from the RBI. This encourages banks to borrow more and lend more at lower rates, increasing the money supply. This is a key expansionary measure. So, the RBI *would* do this. 5. The question asks what the RBI would *not* do. Only increasing the MSF Rate (Statement 2) is inconsistent with an expansionist monetary policy.