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
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- Dear money refers to money that is hard to obtain due to:
'Indradhanush 2.0' is associated with:
The purchasing power of a currency relative to another at current exchange rates and prices is ________.
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Important Questions from Money and Banking
Which one of the following is likely to be the most inflationary in its effects?
Which one of the following effects of creation of black money in India has been the main cause of worry to the Government of India?
Consider the following statements :
The effect of devaluation of a currency is that it necessarily
1. improves the competitiveness of the domestic exports in the foreign markets
2. increase the foreign value of domestic currency
3. improves the trade balance
Which of the above statements is/are correct?
Indian Government Bond Yields are influenced by which of the following?
1. Actions of the United States Federal Reserve
2. Actions of the Reserve Bank of India
3. Inflation and short-term interest rates
Select the correct answer using the code given below.
With reference to “Urban Cooperative Banks" in India, consider the following statements :
1. They are supervised and regulated by local boards set up by the State Governments.
2. They can issue equity shares and preference shares.
3. They were brought under the purview of the Banking Regulation Act, 1949 through an Amendment in 1966
Which of the statements given above is/are correct?
