UPSC CSE Prelims
Question 29
With reference to Indian economy, consider the following :
- Bank rate
- Open market operations
- Public debt
- Public revenue
Which of the above is/are component/components of Monetary Policy?
View correct answer and explanation
Correct answer: C
Correct Option: C
Explanation: Monetary policy uses central-bank instruments such as the bank rate and open-market operations; government debt and tax/non-tax receipts are primarily fiscal-policy matters.
Statement/Pair-wise Analysis:
Statement/Item 1: Correct - The bank rate is a central-bank policy interest rate.
Statement/Item 2: Correct - Open-market purchases/sales affect bank liquidity and the money supply.
Statement/Item 3: Incorrect - Public debt financing is principally a fiscal-policy and public-finance concern, although central banks interact with it.
Statement/Item 4: Incorrect - Public revenue from taxation and other government receipts belongs to fiscal policy.
Option-wise Analysis:
A: Incorrect - omits correct statement/item 2.
B: Incorrect - includes incorrect statement/items 3, 4; omits correct statement/item 1.
C: Correct - includes all and only the correct items.
D: Incorrect - includes incorrect statement/items 3, 4; omits correct statement/item 2.