BANKING AFFAIRS

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Which of the following is not a measure adopted by the Government or RBI to control inflation?

A	Monetary policy
B	Fiscal policy
C	Bank Rate
D	Financial inclusion

Explanation:

Detailed explanation-1: -Financial inclusion is the delivery of financial services at affordable costs to vast sections of disadvantaged and low income groups. It is not a measure to control inflation.

Detailed explanation-2: -The RBI controls Inflation and Deflation by employing a variety of monetary policy tools such as Repo Rate, Reverse Repo Rate, Bank Rate, Open Market Operations, Statutory Liquidity Ratio (SLR), Cash Reserve Ratio (CRR), Liquidity Adjustment Facility (LAF), Market Stabilisation Scheme.

Detailed explanation-3: -Monetary policy may not be effective in controlling inflation, if inflation is due to cost-push factors. Monetary policy can only be helpful in controlling inflation due to demand-pull factors.

Detailed explanation-4: -1] Monetary Measures Controlling the liquidity levels in the market is an effective way to check inflation in the economy.

Detailed explanation-5: -Contractionary monetary policy is now a more popular method of controlling inflation. The goal of a contractionary policy is to reduce the money supply within an economy by increasing interest rates.

There is 1 question to complete.