Question

    Which statements correctly describe the roles and

    responsibilities of the Reserve Bank of India (RBI)? Statements:  1. The RBI formulates and implements India's monetary policy.  2. The RBI uses tools such as the repo rate and cash reserve ratio (CRR) to control inflation and manage liquidity.  3. The Ministry of Finance is responsible for setting the repo rate in India.
    A Statements 1 and 2 only Correct Answer Incorrect Answer
    B All statements are correct Correct Answer Incorrect Answer
    C Statements 2 and 3 only Correct Answer Incorrect Answer
    D Statements 1 and 3 only Correct Answer Incorrect Answer

    Solution

    The Reserve Bank of India is tasked with controlling the monetary policy of the country, utilizing instruments like the repo rate and CRR to regulate money supply and inflation. The repo rate is decided by the RBI's Monetary Policy Committee, not the Ministry of Finance.

    Practice Next