Question

With reference to Indian economy, consider the following—

1. Bank rate

2. Open market operations

3. Public debt

4. Public revenue

Which of the above is/are component/components of Monetary Policy?

A 1 only Correct Answer Incorrect Answer
B 2, 3 and 4 Correct Answer Incorrect Answer
C 1 and 2 Correct Answer Incorrect Answer
D 1, 3 and 4 Correct Answer Incorrect Answer
E None of the these Correct Answer Incorrect Answer

Solution

The Reserve Bank of India (RBI) uses the monetary policy to manage liquidity or money supply in a manner that balances inflation and at the same time aids growth. The tools RBI uses to manage monetary policy are : 1. Repo and Reverse Repo Rate. 2. Cash Reserve Ratio (CRR). 3. Open Market Operations. 4. Statutory Liquidity Ratio. 5. Bank Rate.

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