Question
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?
(a) 1 only
(b) 2, 3 and 4
(c) 1 and 2
(d) 1, 3 and 4
Answer:
C
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Explanation:
1. Bank rate: The bank rate is the rate at which the central bank lends money to commercial banks. It is one of the tools used by the central bank to regulate the money supply and influence interest rates.
2. Open market operations: Open market operations refer to the buying and selling of government securities by the central bank in the open market. It is another tool used to control the money supply and influence interest rates.
3. Public debt: Public debt refers to the total outstanding borrowings of the government from various sources, such as individuals, institutions, and foreign entities. It is not directly a component of monetary policy.
4. Public revenue: Public revenue refers to the income or receipts generated by the government through various sources, such as taxes, fees, and fines. It is not directly a component of monetary policy.