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With reference to India economy, consider the following:
- Bank rate
- Open market operations
- Public debt
- Public revenue
Which of the above is/are component/components of Monetary Policy?
- a)1 only
- b)2, 3 and 4
- c)1 and 2
- d)1, 3 and 4
Correct answer is option 'C'. Can you explain this answer?
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With reference to India economy, consider the following: Bank rate Ope...
Monetary Policy Components in India
Monetary policy refers to the process by which the central bank manages the money supply and interest rates in the economy to achieve specific goals such as price stability, economic growth, and employment. In India, the Reserve Bank of India (RBI) is responsible for formulating and implementing monetary policy. The components of monetary policy in India are:
1. Bank Rate:
The bank rate is the rate at which the RBI lends money to commercial banks. It influences the interest rates in the economy, which, in turn, affects the borrowing and spending behavior of individuals and businesses. A higher bank rate means higher borrowing costs for banks, which can lead to higher lending rates and lower borrowing and spending in the economy.
2. Open Market Operations:
Open market operations refer to the buying and selling of government securities by the RBI in the open market. When the RBI buys government securities, it injects money into the economy, which can stimulate borrowing and spending. When it sells government securities, it withdraws money from the economy, which can reduce borrowing and spending.
3. Public Debt:
Public debt refers to the total amount of money owed by the government to individuals, businesses, and other countries. The RBI manages public debt by buying and selling government securities, which can affect the money supply in the economy.
4. Public Revenue:
Public revenue refers to the income received by the government from taxes, fees, and other sources. The RBI can influence public revenue by adjusting the interest rates, which can affect the borrowing and spending behavior of individuals and businesses.
Conclusion:
Out of the given options, Bank rate and Open market operations are the components of monetary policy in India. Hence, the correct answer is option C.
Monetary policy refers to the process by which the central bank manages the money supply and interest rates in the economy to achieve specific goals such as price stability, economic growth, and employment. In India, the Reserve Bank of India (RBI) is responsible for formulating and implementing monetary policy. The components of monetary policy in India are:
1. Bank Rate:
The bank rate is the rate at which the RBI lends money to commercial banks. It influences the interest rates in the economy, which, in turn, affects the borrowing and spending behavior of individuals and businesses. A higher bank rate means higher borrowing costs for banks, which can lead to higher lending rates and lower borrowing and spending in the economy.
2. Open Market Operations:
Open market operations refer to the buying and selling of government securities by the RBI in the open market. When the RBI buys government securities, it injects money into the economy, which can stimulate borrowing and spending. When it sells government securities, it withdraws money from the economy, which can reduce borrowing and spending.
3. Public Debt:
Public debt refers to the total amount of money owed by the government to individuals, businesses, and other countries. The RBI manages public debt by buying and selling government securities, which can affect the money supply in the economy.
4. Public Revenue:
Public revenue refers to the income received by the government from taxes, fees, and other sources. The RBI can influence public revenue by adjusting the interest rates, which can affect the borrowing and spending behavior of individuals and businesses.
Conclusion:
Out of the given options, Bank rate and Open market operations are the components of monetary policy in India. Hence, the correct answer is option C.
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With reference to India economy, consider the following: Bank rate Open market operations Public debt Public revenueWhich of the above is/are component/components of Monetary Policy?a)1 onlyb)2, 3 and 4c)1 and 2d)1, 3 and 4Correct answer is option 'C'. Can you explain this answer?
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With reference to India economy, consider the following: Bank rate Open market operations Public debt Public revenueWhich of the above is/are component/components of Monetary Policy?a)1 onlyb)2, 3 and 4c)1 and 2d)1, 3 and 4Correct answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about With reference to India economy, consider the following: Bank rate Open market operations Public debt Public revenueWhich of the above is/are component/components of Monetary Policy?a)1 onlyb)2, 3 and 4c)1 and 2d)1, 3 and 4Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to India economy, consider the following: Bank rate Open market operations Public debt Public revenueWhich of the above is/are component/components of Monetary Policy?a)1 onlyb)2, 3 and 4c)1 and 2d)1, 3 and 4Correct answer is option 'C'. Can you explain this answer?.
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