Monitory policy is announced in India by _________a)Ministry of Financeb)Reserve Bank of Indiac)Planning Commissiond)GovernmentCorrect answer is option 'B'. Can you explain this answer?

Question

Answer

B: Reserve Bank of India

In India, monetary policy is announced by the Reserve Bank of India (RBI). The RBI is the central bank of India and is responsible for implementing and managing monetary policy in the country.

Monetary policy refers to the actions taken by the central bank to influence the supply and demand of money in the economy, with the aim of achieving certain macroeconomic objectives such as price stability, full employment, and economic growth. The RBI uses various tools, such as changing the interest rates, altering the reserve requirements for banks, and engaging in open market operations, to implement monetary policy in India.

The Ministry of Finance is responsible for managing the government's finances, including preparing the annual budget, mobilizing financial resources, and formulating fiscal policy. The Planning Commission is a government body that is responsible for formulating the country's five-year plans and for coordinating the development activities of various sectors of the economy. The government refers to the executive branch of government, which is responsible for implementing the policies and laws of the country.

Answer

B) reserve Bank of India

Answer

B: Reserve Bank of India

In India, monetary policy is announced by the Reserve Bank of India (RBI). The RBI is the central bank of India and is responsible for implementing and managing monetary policy in the country.

Monetary policy refers to the actions taken by the central bank to influence the supply and demand of money in the economy, with the aim of achieving certain macroeconomic objectives such as price stability, full employment, and economic growth. The RBI uses various tools, such as changing the interest rates, altering the reserve requirements for banks, and engaging in open market operations, to implement monetary policy in India.

The Ministry of Finance is responsible for managing the government's finances, including preparing the annual budget, mobilizing financial resources, and formulating fiscal policy. The Planning Commission is a government body that is responsible for formulating the country's five-year plans and for coordinating the development activities of various sectors of the economy. The government refers to the executive branch of government, which is responsible for implementing the policies and laws of the country.

Answer

Reserve Bank of India
The Reserve Bank of India (RBI) is the central banking institution in India responsible for formulating and implementing the country's monetary policy. It is an autonomous body that was established in 1935 and plays a crucial role in controlling inflation, regulating the financial system, and managing the exchange rate of the Indian rupee.

Functions of RBI in Monetary Policy
- Formulating and implementing monetary policy to achieve price stability and economic growth.
- Regulating the money supply in the economy through various tools like repo rate, reverse repo rate, cash reserve ratio, etc.
- Managing foreign exchange reserves to stabilize the currency and promote external trade.
- Supervising and regulating the banking sector to maintain financial stability.

Role of RBI in Announcing Monetary Policy
The RBI's Monetary Policy Committee (MPC) meets periodically to review the economic situation and decide on the appropriate monetary policy stance. The MPC considers factors like inflation, growth projections, global economic conditions, and other relevant data before announcing its decisions.

Announcement of Monetary Policy
Once the MPC reaches a consensus on the monetary policy stance, the RBI Governor announces the decisions regarding key policy rates like the repo rate, reverse repo rate, and liquidity measures. These announcements have a significant impact on financial markets, interest rates, and overall economic activity in the country.
In conclusion, the Reserve Bank of India plays a crucial role in formulating and announcing monetary policy in India to ensure price stability, economic growth, and financial stability.

Answer

The monetary policy states that the use of financial instruments under the control of the RBI to standardise magnitude such as money supply etc to achieve the ultimate objective of economic policy mentioned in the RBI act ,1934.

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