Monetary Policy
Economics ⇒ Money and Banking
Monetary Policy starts at 12 and continues till grade 12.
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See sample questions for grade 12
Describe how monetary policy can be used to control inflation.
Describe the relationship between monetary policy and economic growth.
Describe the role of the Monetary Policy Committee (MPC) in India.
Explain how an increase in the Cash Reserve Ratio (CRR) affects the credit creation capacity of commercial banks.
Explain how open market operations can be used to control the money supply in the economy.
Explain the difference between quantitative and qualitative instruments of monetary policy.
Explain the impact of an expansionary monetary policy on aggregate demand.
Suppose the inflation rate in the economy is rising rapidly. What monetary policy action should the RBI take to control inflation?
If the RBI wants to reduce liquidity in the banking system, which of the following actions should it take? (1) Decrease CRR (2) Buy government securities (3) Increase repo rate (4) Decrease SLR
Open Market Operations refer to: (1) Buying and selling of government securities by the central bank (2) Opening new bank branches (3) Issuing new currency notes (4) Regulating foreign exchange rates
Suppose the RBI wants to encourage investment in the economy. Which of the following actions is it most likely to take? (1) Increase repo rate (2) Increase CRR (3) Decrease repo rate (4) Increase SLR
Which institution is responsible for formulating and implementing monetary policy in India? (1) Ministry of Finance (2) Reserve Bank of India (3) State Bank of India (4) NITI Aayog
Fill in the blank: The ________ Committee is responsible for setting the policy repo rate in India.
Fill in the blank: The ________ is the minimum percentage of net demand and time liabilities that banks must maintain in the form of liquid assets.
Fill in the blank: The ________ is the rate at which the central bank borrows money from commercial banks.
Fill in the blank: The ________ is the rate at which the central bank lends money to commercial banks in the short term.
State whether the following statement is true or false: An expansionary monetary policy is likely to increase aggregate demand in the economy.
State whether the following statement is true or false: An increase in the repo rate by the RBI is likely to make borrowing cheaper for commercial banks.
State whether the following statement is true or false: Open Market Operations can be used to both increase and decrease the money supply in the economy.
State whether the following statement is true or false: Selective credit controls are used to influence the direction of credit in the economy.
