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The monetary policy of India is frames by-
1. The Government of India
2. The Reserve Bank of India
3. The State Bank of India
4. None of the above

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Correct Answer - Option 2 : The Reserve Bank of India

The correct answer is The Reserve Bank of India.

  • Monetary policy:-
    • It is the process by which the monetary authority of a country, generally the central bank, controls the supply of money in the economy.
    • The monetary authority control interest rates in order to maintain price stability and achieve high economic growth.
    • Monetary policy is an economic policy that manages the size and growth rate of the money supply in an economy.
    • It is a powerful tool to regulate macroeconomic variables such as inflation and unemployment.
    • The central monetary authority is the Reserve Bank of India (RBI) in India.
  • In the economy, It is designed to maintain price stability.
  • Other objectives of the monetary policy of India, as stated by RBI, are following:-
    • Price stability
    • Controlled expansion of bank credit
    • Promotion of fixed investment
    • Restriction of inventories and stocks
    • Promoting efficiency
    • Reducing rigidity

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