The primary objective of the Reserve Bank of India's monetary policy is to: MCQ with Answer and Explanation

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The primary objective of the Reserve Bank of India's monetary policy is to:

A. eliminate fiscal deficit

B. manage government expenditure

C. maximize exports

D. maintain price stability while keeping in mind the objective of growth

Answer: Option D

Solution (By JKSSB Mock Tests)

The RBI's monetary policy aims primarily to maintain price stability while supporting economic growth.

This question belongs to: Economy GK Economy Set 1

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Question #1

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The 'Goods and Services Tax' has enabled seamless input tax credit across states, which has eliminated:

A. income tax

B. direct taxes

C. customs duty

D. tax cascading and barriers to interstate trade

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Correct Answer: Option D

Explanation:
Seamless ITC has removed cascading and eased interstate trade.

This question belongs to: Economy GK Economy Set 1

Question #2

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The 'errors and omissions' item in the balance of payments is used to:

A. show exports

B. balance the statistical discrepancies

C. show foreign exchange reserves

D. show imports

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Correct Answer: Option B

Explanation:
Errors and omissions balance statistical discrepancies so the BoP accounts sum to zero.

This question belongs to: Economy GK Economy Set 1

Question #3

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Which of the following is a characteristic of the 'First-Generation' models of currency crises?

A. Only banking-sector problems matter

B. Crises result from inconsistent fundamentals, typically persistent fiscal deficits financed by money creation under a fixed exchange rate

C. Crises are purely self-fulfilling without any fundamental weakness

D. Crises never involve reserve losses

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Correct Answer: Option B

Explanation:
First-generation models (Krugman, Flood-Garber) show that a steadily deteriorating fiscal position financed by credit expansion leads to a speculative attack that exhausts reserves and forces the abandonment of the fixed exchange rate.

This question belongs to: Economy GK Economy Set 1

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