Monetary Policy

29 Questions
  1. 1
    Consider the following statements in respect of the digital rupee :
    1. It is a sovereign currency issued by the Reserve Bank of India (RBI) in alignment with its monetary policy.
    2. It appears as a liability on the RBI's balance sheet.
    3. It is insured against inflation by its very design.
    4. It is freely convertible against commercial bank money and cash.
    Which of the statements given above are correct ?
    UPSC CSE I - 2024
  2. 2
    Consider the following statements :
    1. Statement-I : In the post-pandemic recent past, many Central Banks worldwide had carried out interest rate hikes.
    2. Statement-II : Central Banks generally assume that they have the ability to counteract the rising consumer prices via monetary policy means.
    Which one of the following is correct in respect of the above statements?
    UPSC CSE I - 2023
  3. 3
    With reference to Central Bank digital currencies, consider the following statements :
    1. It is possible to make payments in a digital currency without using US dollar or SWIFT system.
    2. A digital currency can be distributed with a condition programmed into it such as a timeframe for spending it.
    Which of the statements given above is/are correct?
    UPSC CSE I - 2023
  4. 4
    Which one of the following activities of the Reserve Bank of India is considered to be part of 'sterilization'?
    UPSC CSE I - 2023
  5. 5
    With reference to the Indian economy, consider the following statements :
    1. If the inflation is too high, Reserve Bank of India (RBI) is likely to buy government securities.
    2. If the rupee is rapidly depreciating, RBI is likely to sell dollars in the market.
    3. If interest rates in the USA or European Union were to fall, that is likely to induce RBI to buy dollars.
    Which of the statements given above are correct ?
    UPSC CSE I - 2022
  6. 6
    In India, which one of the following is responsible for maintaining price stability by controlling inflation ?
    UPSC CSE I - 2022
  7. 7
    Indian Government Bond Yields are influenced by which of the following?
    1. Actions of the United States Federal Reserve
    2. Actions of the Reserve Bank of India
    3. Inflation and short-term interest rates
    Select the correct answer using the code given below.
    UPSC CSE I - 2021
  8. 8
    The money multiplier in an economy increases with which one of the following?
    UPSC CSE I - 2021
  9. 9

    If you withdraw ₹1,00,000 in cash from your Demand Deposit Account at your bank, the immediate effect on aggregate money supply in the economy will be:

    UPSC CSE I - 2020
  10. 10

    If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do?

    1. Cut and optimize the Statutory Liquidity Ratio
    2. Increase the Marginal Standing Facility Rate
    3. Cut the Bank Rate and Repo Rate

    Select the correct answer using the code given below:

    UPSC CSE I - 2020
  11. 11
    The money multiplier in an economy increases with which one of the following?
    UPSC CSE I - 2019
  12. 12
    Which one of the following is not the most likely measure the Government/RBI takes to stop the slide of Indian rupee?
    UPSC CSE I - 2019
  13. 13
    Which one of the following statements correctly describes the meaning of legal tender money ?
    UPSC CSE I - 2018
  14. 14
    Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC) ?
    1. It decides the RBI's benchmark interest rates.
    2. It is a 12-member body including the Governor of RBI and is reconstituted every year.
    3. It functions under the chairmanship of the Union Finance Minister.
    Select the correct answer using the code given below :
    UPSC CSE I - 2017
  15. 15
    What is/are the purpose/purposes of the 'Marginal Cost of Funds based Lending Rate (MCLR)' announced by RBI?
    1. These guidelines help improve the transparency in the methodology followed by banks for determining the interest rates on advances.
    2. These guidelines help ensure availability of bank credit at interest rates which are fair to the borrowers as well as the banks.
    Select the correct answer using the code given below.
    UPSC CSE I - 2016
  16. 16
    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?
    UPSC CSE I - 2015
  17. 17
    When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points, which of the following is likely to happen?
    UPSC CSE I - 2015
  18. 18
    In the context of Indian economy, which of the following is/are the purpose/purposes of 'Statutory Reserve Requirements'?
    1. To enable the Central Bank to control the amount of advances the banks can create
    2. To make the people's deposits with banks safe and liquid
    3. To prevent the commercial banks from making excessive profits
    4. To force the banks to have sufficient vault cash to meet their day-to-day requirements
    Select the correct answer using the code given below.
    UPSC CSE I - 2014
  19. 19
    If the interest rate is decreased in an economy, it will
    UPSC CSE I - 2014
  20. 20
    Consider the following liquid assets:
    1. Demand deposits with the banks
    2. Time deposits with the banks
    3. Savings deposits with the banks
    4. Currency
    The correct sequence of these assets in the decreasing order of liquidity is
    UPSC CSE I - 2013
  21. 21
    In the context of Indian economy, 'Open Market Operations' refers to
    UPSC CSE I - 2013
  22. 22
    An increase in the Bank Rate generally indicates that the
    UPSC CSE I - 2013
  23. 23
    Which of the following measures would result in an increase in the money supply in the economy?
    1. Purchase of government securities from the public by the Central Bank
    2. Deposit of currency in commercial banks by the public
    3. Borrowing by the government from the Central Bank
    4. Sale of government securities to the public by the Central Bank
    Select the correct answer using the codes given below:
    UPSC CSE I - 2012
  24. 24
    The lowering of Bank Rate by the Reserve Bank of India leads to
    UPSC CSE I - 2011
  25. 25

    Which of the following terms indicates a mechanism used by commercial banks for providing credit to the government?

    UPSC CSE I - 2010
  26. 26

    When the Reserve Bank of India announces an increase of the Cash Reserve Rate, what does it mean?

    UPSC CSE I - 2010
  27. 27

    Consider the following statements:

    1. The repo rate is the rate at which other banks borrow from the Reserve Bank of India.
    2. A value of 1 for Gini Coefficient in a country implies that there is perfectly equal income for everyone in its population.

    Which of the statements given above is/are correct?

    UPSC CSE I - 2007
  28. 28

    Consider the following:

    1. Currency with the public
    2. Demand deposits with banks
    3. Time deposits with banks

    Which of these are included in Broad Money (M3) in India?

    UPSC CSE I - 2002
  29. 29

    The sum of which of the following constitutes Broad Money in India?

    1. Currency with the public
    2. Demand deposits with banks
    3. Time deposits with banks
    4. Other deposits with RBI

    Choose the correct answer using the codes given below:

    UPSC CSE I - 1997