Question
What is 'monetary policy' and who implements
it?Solution
Monetary policy refers to the strategies employed by a central bank, such as the Reserve Bank of India, to control the volume of money supply and interest rates in the economy. Its primary objectives include controlling inflation, managing employment levels, stabilizing the national currency, and fostering conditions for economic growth. Key tools of monetary policy include open market operations, setting reserve requirements, and adjusting interest rates, which together influence liquidity, consumer spending, investment, and overall economic stability.
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