Explain the monetary policy of R.B.I
Understand the Problem
The question is asking for an explanation of the monetary policy implemented by the Reserve Bank of India (R.B.I). This involves discussing the objectives, tools, and effects of the monetary policy in managing the economy and ensuring financial stability.
Answer
The RBI's monetary policy manages money supply for inflation control, economic growth, and stability.
The monetary policy of the Reserve Bank of India (RBI) involves managing the supply of money and credit in the economy. The primary objectives are to control inflation, achieve stable economic growth, and maintain price stability, using various tools like interest rates and reserve requirements.
Answer for screen readers
The monetary policy of the Reserve Bank of India (RBI) involves managing the supply of money and credit in the economy. The primary objectives are to control inflation, achieve stable economic growth, and maintain price stability, using various tools like interest rates and reserve requirements.
More Information
RBI uses tools like repo rate, reverse repo rate, cash reserve ratio (CRR), and statutory liquidity ratio (SLR) to adjust the amount of money supply in the economy. By modifying these, they aim to influence economic variables like consumer spending and investment.
Tips
A common mistake is to overlook the dual mandate of controlling inflation and supporting economic growth, focusing only on one aspect. It's crucial to understand the balance RBI aims to achieve.
Sources
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