Monetary Policy – Multiple Choice Questions (MCQs)

1. 1. What is the main objective of Monetary Policy?

   • A. Control inflation
   • B. Control unemployment
   • C. Manage elections
   • D. Increase subsidies

2. 2. Who formulates the Monetary Policy in India?

   • A. RBI
   • B. Finance Minister
   • C. SEBI
   • D. NABARD

3. 3. Which tool is used to control inflation?

   • A. Repo Rate
   • B. NPA
   • C. RTGS
   • D. NEFT

4. 4. What does CRR stand for?

   • A. Cash Reserve Ratio
   • B. Credit Reserve Ratio
   • C. Central Rate Regulation
   • D. Capital Return Ratio

5. 5. What does SLR stand for?

   • A. Statutory Liquidity Ratio
   • B. Safe Loan Ratio
   • C. Savings Liquidity Regulation
   • D. Secure Loan Rate

6. 6. What is the full form of Repo Rate?

   • A. Repurchase Rate
   • B. Return on Policy Rate
   • C. Retail Purchase Rate
   • D. Reserve Position Rate

7. 7. What does Reverse Repo Rate mean?

   • A. Rate RBI pays to banks
   • B. Rate banks charge RBI
   • C. Rate for retail lending
   • D. Rate of forex conversion

8. 8. When is the Monetary Policy reviewed in India?

   • A. Bi-monthly
   • B. Annually
   • C. Quarterly
   • D. Monthly

9. 9. Which committee decides the policy rates?

   • A. MPC
   • B. SEBI
   • C. RBI Board
   • D. NITI Aayog

10. 10. What is the current inflation target set by RBI?

    • A. 4% ±2%
    • B. 3% ±1%
    • C. 5% ±2%
    • D. 6% ±1%

11. 11. Which rate is used by RBI to lend money to banks?

    • A. Repo Rate
    • B. Reverse Repo Rate
    • C. Base Rate
    • D. CRR

12. 12. Which rate is used by RBI to absorb liquidity from banks?

    • A. Reverse Repo Rate
    • B. Repo Rate
    • C. Base Rate
    • D. MSF