What is the primary objective of the Monetary Policy in India?Question 7AnswerA.Promoting exportsB.Reducing government expenditureC.Controlling inflation and maintaining price stabilityD.Increasing unemployment rates
Question
What is the primary objective of the Monetary Policy in India?Question 7AnswerA.Promoting exportsB.Reducing government expenditureC.Controlling inflation and maintaining price stabilityD.Increasing unemployment rates
Solution
The primary objective of the Monetary Policy in India is C. Controlling inflation and maintaining price stability.
Here's a step-by-step explanation:
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The Reserve Bank of India (RBI) is responsible for formulating and implementing Monetary Policy in India.
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The primary objective of this policy is to maintain price stability while keeping in mind the objective of growth. Price stability is important because inflation can erode the value of money.
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This is achieved by controlling the supply of money in the economy. If there is too much money in the economy, it can lead to inflation. If there is too little, it can lead to deflation.
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The RBI uses various tools to control the supply of money, including changing interest rates, buying and selling government securities, and changing the amount of money banks are required to keep in reserve.
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Therefore, the correct answer is C. Controlling inflation and maintaining price stability.
Similar Questions
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