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Monetary Policy & Money Supply

27 questions in Indian Economy.

Asked in 2023, 2022, 2021, 2020, 2019, 2017, 2015, 2014, 2013, 2012, 2011, 2010, 2007, 2002, 1998, 1997

2023 · Q22Indian EconomyMonetary Policy & Money Supplyeasy

Consider the following statements : Statement–I : In the post-pandemic recent past, many Central Banks worldwide had carried out interest rate hikes. Statement–II : Central Banks generally assume that they have the ability to counteract the rising consumer prices via monetary policy means. Which one of the following is correct in respect of the above statements?

  1. (a)Both Statement–I and Statement–II are correct and Statement–II is the correct explanation for Statement–I
  2. (b)Both Statement–I and Statement–II are correct and Statement–II is not the correct explanation for Statement–I
  3. (c)Statement–I is correct but Statement–II is incorrect
  4. (d)Statement–I is incorrect but Statement–II is correct
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Official answer(a) Both Statement–I and Statement–II are correct and Statement–II is the correct explanation for Statement–I

2022 · Q3Indian EconomyMonetary Policy & Money Supplymoderate

With reference to the Indian economy, consider the following statements : 1. If the inflation is too high, Reserve Bank of India (RBI) is likely to buy government securities. 2. If the rupee is rapidly depreciating, RBI is likely to sell dollars in the market. 3. If interest rates in the USA or European Union were to fall, that is likely to induce RBI to buy dollars. Which of the statements given above are correct ?

  1. (a)1 and 2 only
  2. (b)2 and 3 only
  3. (c)1 and 3 only
  4. (d)1, 2 and 3
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Official answer(b) 2 and 3 only

2021 · Q15Indian EconomyMonetary Policy & Money Supplymoderate

In India, the central bank’s function as the ‘lender of last resort’ usually refers to which of the following? 1. Lending to trade and industry bodies when they fail to borrow from other sources 2. Providing liquidity to the banks having a temporary crisis 3. Lending to governments to finance budgetary deficits Select the correct answer using the code given below.

  1. (a)1 and 2
  2. (b)2 only
  3. (c)2 and 3
  4. (d)3 only
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Official answer(b) 2 only

2015 · Q22Indian EconomyMonetary Policy & Money Supplymoderate

When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points, which of the following is likely to happen?

  1. (a)India's GDP growth rate increases drastically
  2. (b)Foreign Institutional Investors may bring more capital into our country
  3. (c)Scheduled Commercial Banks may cut their lending rates
  4. (d)It may drastically reduce the liquidity to the banking system
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Official answer(c) Scheduled Commercial Banks may cut their lending rates

2014 · Q33Indian EconomyMonetary Policy & Money Supplymoderate

In the context of Indian economy, which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements’? 1. To enable the Central Bank to control the amount of advances the banks can create 2. To make the people’s deposits with banks safe and liquid 3. To prevent the commercial banks from making excessive profits 4. To force the banks to have sufficient vault cash to meet their day-to-day requirements Select the correct answer using the code given below.

  1. (a)1 only
  2. (b)1 and 2 only
  3. (c)2 and 3 only
  4. (d)1, 2, 3 and 4
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Official answer(a) 1 only

2012 · Q77Indian EconomyMonetary Policy & Money Supplymoderate

Which of the following measures would result in an increase in the money supply in the economy? 1. Purchase of government securities from the public by the Central Bank 2. Deposit of currency in commercial banks by the public 3. Borrowing by the government from the Central Bank 4. Sale of government securities to the public by the Central Bank Select the correct answer using the codes given below :

  1. (a)1 only
  2. (b)2 and 4 only
  3. (c)1 and 3
  4. (d)2, 3 and 4
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Official answer(c) 1 and 3