ECONOMICS
MONETARY POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Dependent on political considerations
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Ability to formulate policy
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Ability to set objectives
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Communication without constraint
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Detailed explanation-1: -Accepting deposits of general public is the function of commercial banks, as central bank does not deal with general public and only deals with commercial bank mainly for its reserve requirement.
Detailed explanation-2: -A central bank is an independent national authority that conducts monetary policy, regulates banks, and provides financial services. Central banks have three monetary policy tools at hand, including reserve requirements, open market operations, and target interest rates.
Detailed explanation-3: -A central bank is independent if it can make policy, such as setting interest rates or printing money, without interference from elected officials or the private sector.
Detailed explanation-4: -Out of the given options, conduct of monetary policy and lending to the commercial banking system are two common functions of the RBI.