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    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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