UPSC 2013 › Indian Economy › Monetary Policy & Money Supply

4 questions · 2013 · answers as per the UPSC key

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UPSC 2013 · Q43 · Indian Economy › Monetary Policy & Money Supply · Save

An increase in the Bank Rate generally indicates that the

(a) market rate of interest is likely to fall
(b) Central Bank is no longer making loans to commercial banks
(c) Central Bank is following an easy-money policy
(d) Central Bank is following a tight-money policy
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Answer: (d) Central Bank is following a tight-money policy
UPSC 2013 · Q74 · Indian Economy › Monetary Policy & Money Supply · Save

Consider the following liquid assets:

  1. Demand deposits with the banks
  2. Time deposits with the banks
  3. Savings deposits with the banks
  4. Currency The correct sequence of these assets in the decreasing order of liquidity is
(a) 1–4–3–2
(b) 4–3–2–1
(c) 2–3–1–4
(d) 4–1–3–2
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Answer: (d) 4–1–3–2
UPSC 2013 · Q75 · Indian Economy › Monetary Policy & Money Supply · Save

In the context of Indian economy, ‘Open Market Operations’ refers to

(a) borrowing by scheduled banks from the RBI
(b) lending by commercial banks to industry and trade
(c) purchase and sale of government securities by the RBI
(d) None of the above
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Answer: (c) purchase and sale of government securities by the RBI
UPSC 2013 · Q85 · Indian Economy › Monetary Policy & Money Supply · Save

Supply of money remaining the same when there is an increase in demand for money, there will be

(a) a fall in the level of prices
(b) an increase in the rate of interest
(c) a decrease in the rate of interest
(d) an increase in the level of income and employment
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Answer: (b) an increase in the rate of interest