gs1medium

With reference to the Indian economy, consider the following:

  1. 1.Bank rate
  2. 2.Open market operations
  3. 3.Public debt
  4. 4.Public revenue

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

  1. A.1 only
  2. B.2, 3 and 4 only
  3. C.1 and 2 only
  4. D.1, 3 and 4 only
▶ Answer & Explanation

Correct answer: C. 1 and 2 only

Monetary policy refers to actions undertaken by a central bank to manipulate the money supply and credit conditions to stimulate or restrain economic activity. The bank rate and open market operations are direct tools used by the Reserve Bank of India (RBI) to influence liquidity and interest rates. Public debt and public revenue are primarily fiscal policy instruments, managed by the government, although they can have indirect effects on monetary conditions.

Source: UPSC gs1 2015

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