Identifying RBI Monetary Policy Instruments
Monetary policy refers to the actions undertaken by a central bank, like the Reserve Bank of India (RBI), to manipulate the money supply and credit conditions to achieve macroeconomic objectives such as price stability and sustainable growth.
Key RBI Monetary Policy Tools
The RBI employs several instruments to manage liquidity and influence interest rates. Common instruments include:
- Statutory Liquidity Ratio (SLR): The percentage of deposits banks must maintain in liquid assets.
- Bank Rate: The rate at which the RBI lends funds to commercial banks without collateral.
- Cash Reserve Ratio (CRR): The percentage of total deposits banks must hold as cash reserves with the RBI.
- Repo Rate and Reverse Repo Rate: Tools for managing short-term liquidity.
Understanding GST's Role
Goods and Services Tax (GST) is an indirect tax levied on the supply of goods and services. It is a part of the government's fiscal policy, aimed at revenue generation and simplification of the tax structure. GST is managed by the government (both central and state), not by the RBI as a tool for controlling money supply or credit.
Conclusion on Monetary Policy
Therefore, Goods and Services Tax (GST) is not an instrument of the Reserve Bank of India's monetary policy. The other options (SLR, Bank Rate, CRR) are established tools used by the RBI.
Correct Answer: Goods and Services Tax (GST)
Similar Questions
The purchasing power of a currency relative to another at current exchange rates and prices is ________.
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'Indradhanush 2.0' is associated with:
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Important Questions from Money and Banking
Dr. Urjit Patel, who has been appointed recently as Governor of Reserve Bank of India, was holding which position immediately prior to this appointment?
As per the RBI guidelines, which one of the following is the minimum tenure of Masala Bonds that an Indian company can issue offshore?
______ is a tax system that collects a greater share of income from those with high incomes than from those with lower incomes.
In which year had India's ratio of public debt to GDP gone up to a record 84.2%?
______ is an economic scenario where a peculiar combination of low growth and rising inflation leads to high unemployment.
