What is the primary objective of the Reserve Bank of India's monetary policy?
Practice Questions
Q1
What is the primary objective of the Reserve Bank of India's monetary policy?
Control inflation
Increase employment
Boost exports
Regulate foreign exchange
Questions & Step-by-Step Solutions
What is the primary objective of the Reserve Bank of India's 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 the RBI to control the supply of money in the economy.
Step 3: Identify the main goals of monetary policy. The two main goals are to control inflation and ensure price stability.
Step 4: Understand inflation. Inflation is when prices of goods and services rise, which can reduce the purchasing power of money.
Step 5: Recognize the importance of price stability. Price stability means keeping prices relatively constant, which helps consumers and businesses plan for the future.
Step 6: Conclude that the primary objective of the RBI's monetary policy is to manage inflation and maintain price stability in the economy.
