The 'Interest Rate Policy' is a component of which one of the followin

The ‘Interest Rate Policy’ is a component of which one of the following policies ?

[amp_mcq option1=”Fiscal Policy” option2=”Monetary Policy” option3=”Trade Policy” option4=”Direct Control” correct=”option2″]

This question was previously asked in

UPSC Combined Section Officer – 2024

Download PDF Attempt Online

Interest Rate Policy is a key component of Monetary Policy. Monetary Policy refers to the actions undertaken by a central bank (like the Reserve Bank of India) to manipulate the money supply and credit conditions to stimulate or constrain economic activity.

Central banks use tools like policy interest rates (e.g., repo rate, reverse repo rate) to influence the overall cost of borrowing and lending in the economy.

Fiscal Policy is related to government spending and taxation. Trade Policy concerns international trade regulations. Direct Control is a broad term and not a specific policy category containing interest rates in this context. Monetary policy, through interest rate adjustments and other measures, impacts inflation, economic growth, and liquidity in the financial system.

More similar MCQ questions for Exam preparation:-