General Awareness Quiz on RBI'S Monetary Policy- 19th November 2020

Q1.Monetary policy refers to-
(a)The use of government spending and tax policies to influence economic conditions.
(b)The actions undertaken by a nation’s central bank to control money supply and achieve sustainable economic growth
(c)A macroeconomic concept that measures the difference between the current level of real gross domestic product (GDP) and the GDP that would exist if an economy was operating at full employment
(d)The amount by which aggregate demand must be increased to push the equilibrium level of income through the multiplier to the full employment level

Q2.The Monetary Policy Report is published by-
(a)Ministry of Finance
(b)CSO
(c)NITI Ayog
(d)RBI
(e)NABARD

Q3.The MPC is a statutory and institutionalized framework under-
(a)RBI Act, 1934
(b)Negotiable Instrument Act,1881
(c)The Banking Companies (Legal Practitioner Clients’ Accounts) Act,1949
(d)The State Bank of India Act,1955
(e)Banking Companies (Regulation)Rules,1985

Q4.The ____________of RBI is ex-officio Chairman of the MPC.
(a)Deputy Governor
(b)Governor
(c)Executive Director
(d)AGM
(e)Manager

Q5.Which of the following is a type of Monetary policy?
(a)Deflationary
(b)Inflationay
(c)Expansionary
(d)Negotiable
(e)None of these

Q6.What are the instruments of monetary policy?
(a)Open Market Operations
(b)Credit Ceiling
(c)Statutory Liquidity Ratio
(d)Bank Rate Policy
(e)All of the above

Q7.What is the Full Form of ‘C’ in CRR?
(a)Capital
(b)Current
(c)Compare
(d)Cash
(e)Common

Q8.An instrument which involves buying/selling of securities like government bond from or to the public and banks is referred to as-
(a)Open Market Operations
(b)Cash Reserve Ratio
(c)Statutory Liquidity Ratio
(d)Bank Rate Policy
(e)Credit Ceiling

Q9.What is the Full Form of MPF?
(a)Money Policy Framework
(b)Mobile Policy Framework
(c)Management policy Framework
(d)Monetary Policy Framework
(e)None of the Above

Q10. MPC is required to meet at least ________ times a year.
(a)2
(b)3
(c)4
(d)5
(e)6

Q11.Monetary Policy Committee comprises how many members?
(a)2
(b)3
(c)4
(d)5
(e)6

Q12.The rate at which the Reserve Bank is ready to buy or rediscount bills of exchange or other commercial papers is known as-
(a)Savings Deposit Rate
(b)LAF
(c)MCLR
(d)Bank Rate
(e)Term Deposit Rate

Q13.What is the primary objective of monetary policy?
(a)To maintain price stability
(b)To increase Inflation
(c)To provide security and confidence in the economy.
(d)To monitor your bank account and make transactions from your cell phone
(e)All of the above

Q14.The government of India sets an inflation target for how many years?
(a)2
(b)3
(c)4
(d)5
(e)6

Q15.Which of the following statment is true regarding MPC?
(a)Repo rate is the rate at which RBI lends money to commercial banks.
(b)The Deputy Governor of RBI is ex-officio Chairman of the MPC.
(c)The MPC determines the policy interest rate (repo rate) required to achieve the inflation target
(d)Both (a) & (b)
(e)Both (a) & (c)

Solutions

S1.Ans.(b)
Sol.Monetary policy refers to the actions undertaken by a nation’s central bank to control money supply and achieve sustainable economic growth.

S2.Ans.(d)
Sol.The Monetary Policy Report is published by the Monetary Policy Committee (MPC) of RBI.

S3.Ans.(a)
Sol.The MPC is a statutory and institutionalized framework under the RBI Act, 1934, for maintaining price stability, while keeping in mind the objective of growth.

S4.Ans.(b)
Sol.The Governor of RBI is ex-officio Chairman of the MPC.

S5.Ans.(c)
Sol.Monetary policy can be broadly classified as either expansionary or contractionary.

S6.Ans.(e)
Sol.Some of the following instruments are used by RBI as a part of their monetary policies-
(a)Open Market Operations
(b)Credit Ceiling
(c)Statutory Liquidity Ratio
(d)Bank Rate Policy

S7.Ans.(d)
Sol.Full Form of CRR is Cash Reserve Ratio

S8.Ans.(a)
Sol.An open market operation is an instrument which involves buying/selling of securities like government bond from or to the public and banks. The RBI sells government securities to control the flow of credit and buys government securities to increase credit flow.

S9.Ans.(d)
Sol.Full Form of MPF is Monetary Policy Framework.

S10.Ans.(c)
Sol.The MPC is required to meet at least four times a year.

S11.Ans.(e)
Sol.Monetary Policy Committee comprises six members – three officials of the Reserve Bank of India and three external members nominated by the Government of India.

S12.Ans.(d)
Sol. It is the rate at which the Reserve Bank is ready to buy or rediscount bills of exchange or other commercial papers.

S13.Ans.(a)
Sol.The primary objective of monetary policy is to maintain price stability.

S14.Ans.(d)
Sol.The government of India sets an inflation target for every five years.

S15.Ans.(e)
Sol.statments true regarding MPC are-
(a)Repo rate is the rate at which RBI lends money to commercial banks.
(b)The Governor of RBI is ex-officio Chairman of the MPC.
(c)The MPC determines the policy interest rate (repo rate) required to achieve the inflation target

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