ECONOMICS
MONETARY POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Silly question-they are all traits of the FPC
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It operates directly on the supply and price of the credit
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It could change the cash reserve ratios for banks
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It has the ability to alter loan to value ratios on mortgage
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Detailed explanation-1: -Monetary policy is enacted by a central bank to sustain a level economy and keep unemployment low, protect the value of the currency, and maintain economic growth. By manipulating interest rates or reserve requirements, or through open market operations, a central bank affects borrowing, spending, and savings rates.
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: -Under the Reserve Bank of India, Act, 1934 (RBI Act, 1934) (as amended in 2016), RBI is entrusted with the responsibility of conducting monetary policy in India with the primary objective of maintaining price stability while keeping in mind the objective of growth.
Detailed explanation-4: -India’s central bank is known as the Reserve Bank of India (RBI). Its role is to foster financial stability and regulate India’s currency and credit. Founded in 1935, the bank sets monetary policy for the country. It is fully owned by the government of India and is run by a government-appointed board of directors.