Monetary Policy and Fiscal Policy
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Indian Economy and Indian Financial System — JAIIB.
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Monetary Policy — Owner / Legal Basis / Key Instrument?
Owner: Reserve Bank of India (MPC); Legal Basis: RBI Act, 1934 — Sec. 45ZB; Key Instrument: Repo rate, CRR, OMO
Fiscal Policy — Owner / Legal Basis / Key Instrument?
Owner: Ministry of Finance, GoI; Legal Basis: Constitution Arts. 112-281, FRBM Act 2003; Key Instrument: Taxation, Expenditure, Borrowing
Mechanism — Direct Instruments / Indirect / Market-Based Instruments?
Direct Instruments: Quantity-based, regulatory; Indirect / Market-Based Instruments: Price-based, market-driven
Examples — Direct Instruments / Indirect / Market-Based Instruments?
Direct Instruments: CRR, SLR, Refinance, Credit Ceilings; Indirect / Market-Based Instruments: Repo, Reverse Repo, SDF, MSF, OMO, MSS
Era — Direct Instruments / Indirect / Market-Based Instruments?
Direct Instruments: Pre-1991 (administered regime); Indirect / Market-Based Instruments: Post-1991 (liberalised regime)
Adjustment — Direct Instruments / Indirect / Market-Based Instruments?
Direct Instruments: Discrete, statutory; Indirect / Market-Based Instruments: Frequent, market-clearing
What is Public debt / borrowing?
is the third lever, and transfer payments are a sub-class of expenditure.
Revenue Deficit — Formula / Meaning?
Formula: Revenue Expenditure − Revenue Receipts; Meaning: Govt is consuming more than it earns; "bad" deficit
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