BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -“…the primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth.”

Detailed explanation-2: -The primary objective of monetary policy is Price stability. The price stability goal is attained when the general price level in the domestic economy remains as low and stable as possible in order to foster sustainable economic growth.

Detailed explanation-3: -The case of price stability as the objective of monetary policy rests on the fact that volatility in prices creates uncertainty in decision making. Rising prices affect savings adversely while making speculative investments more attractive.

Detailed explanation-4: -In the broadest terms, monetary policy works by spurring or restraining growth of overall demand for goods and services in the economy. When overall demand slows relative to the economy’s capacity to produce goods and services, unemployment tends to rise and inflation tends to decline.

Detailed explanation-5: -The monetary policy adopted by the Reserve Bank is both investment and saving oriented. To encourage investment, adequate funds were made available for productive purposes at reasonable rates of interest. The Reserve Bank has also kept the interest on deposits at a reasonable rate to attract savings.