Question

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

Answer 1

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