What is the primary function of the Monetary Policy Committee (MPC) in India?

Practice Questions

Q1
What is the primary function of the Monetary Policy Committee (MPC) in India?
  1. To set fiscal policy
  2. To determine the Repo Rate
  3. To regulate foreign investments
  4. To manage public debt

Questions & Step-by-Step Solutions

What is the primary function of the Monetary Policy Committee (MPC) in India?
  • Step 1: Understand what the Monetary Policy Committee (MPC) is. It is a group in India that makes decisions about money and interest rates.
  • Step 2: Learn about the Repo Rate. This is the rate at which the central bank (Reserve Bank of India) lends money to commercial banks.
  • Step 3: Know that the MPC meets regularly to discuss and decide on the Repo Rate.
  • Step 4: Realize that changing the Repo Rate affects how much banks charge for loans and how much interest people earn on savings.
  • Step 5: Understand that the MPC's decisions help control inflation and stabilize the economy.
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