With reference to Indian economy, consider the following:
- 1. Bank rate
- 2. Open market operations
- 3. Public debt
- 4. Public revenue
Which of the above is/are component/components of Monetary Policy?
[amp_mcq option1=”1 only” option2=”2, 3 and 4″ option3=”1 and 2″ option4=”1, 3 and 4″ correct=”option3″]
This question was previously asked in
UPSC IAS – 2015
– Instruments of monetary policy include quantitative measures like Bank Rate (discount rate), Open Market Operations (OMOs), Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Repo Rate, and Reverse Repo Rate.
– Bank rate (Statement 1) is the rate at which the central bank lends money to commercial banks without any security.
– Open market operations (Statement 2) involve the buying and selling of government securities by the central bank in the open market to control liquidity.
– Public debt (Statement 3) and public revenue (Statement 4) are components of Fiscal Policy, which relates to government spending and taxation. Fiscal policy is formulated and implemented by the government, not the central bank.