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Question

Given below are two statements, one is labelled as Assertion (A) and the other as Reason (R):

Assertion (A): Monetary policy has an indirect effect.

Reason (R): Monetary policy is operated through the money market (commercial banks).

Select the correct answer using the codes given below :

Code:

A Both (A) and (R) are correct, (R) is the correct explanation of (A). Correct Answer Incorrect Answer
B Both (A) and (R) are correct but (R) is not the correct explanation of (A). Correct Answer Incorrect Answer
C (A) is correct but (R) is incorrect. Correct Answer Incorrect Answer
D (A) is incorrect but (R) is correct. Correct Answer Incorrect Answer

Solution

Assertion (A) and Reason (R) both are correct and Reason (R) correctly explains Assertion (A). Monetary Policy has an indirect effect because Monetary Policy is operated through the money market (commercial banks). Monetary Policy is determined and operated by the Central Bank.

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