What is the primary objective of the Reserve Bank of India (RBI) in terms of mon
Practice Questions
Q1
What is the primary objective of the Reserve Bank of India (RBI) in terms of monetary policy?
To control inflation
To increase government revenue
To regulate foreign exchange
To promote exports
Questions & Step-by-Step Solutions
What is the primary objective of the Reserve Bank of India (RBI) in terms of monetary policy?
Step 1: Understand what the Reserve Bank of India (RBI) is. It is the central bank of India responsible for managing the country's currency and monetary policy.
Step 2: Learn about monetary policy. It refers to the actions taken by a central bank to control the money supply and interest rates in the economy.
Step 3: Identify the main goals of monetary policy. The two primary goals are to control inflation and ensure price stability.
Step 4: Recognize that controlling inflation means keeping prices from rising too quickly, which helps maintain the purchasing power of money.
Step 5: Understand that price stability means keeping prices relatively constant over time, which is important for economic growth and consumer confidence.
Step 6: Conclude that the primary objective of the RBI's monetary policy is to achieve these goals of controlling inflation and ensuring price stability.
