FISCAL AND MONETARY POLICY
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Indian Economy and Indian Financial System — JAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is fiscal policy?
Fiscal policy refers to the government's use of taxation and public expenditure to influence the economy, aiming to achieve goals like growth, employment, and price stability.
What is the Corridor System in India's monetary policy framework?
LAF corridor with SDF as floor and MSF as ceiling rate.
What is monetary policy?
Monetary policy is the process by which the Reserve Bank of India controls the money supply, interest rates, and credit availability to achieve macroeconomic objectives such as price stability and growth.
What is the current inflation target set for India under the flexible inflation targeting framework?
4% CPI inflation with ±2% tolerance band.
Who is responsible for formulating monetary policy in India?
The Reserve Bank of India (RBI), through the Monetary Policy Committee (MPC), is responsible for formulating and implementing monetary policy in India.
How does a reduction in CRR affect the money supply in the economy?
Lower CRR increases lendable funds, expanding money supply.
What is the primary objective of India's monetary policy as mandated by the RBI Act?
The primary objective is to maintain price stability while keeping in mind the objective of growth, with a target of 4% CPI inflation with a band of +/- 2%.
What is meant by the 'policy rate' in Indian monetary policy context?
The repo rate, which anchors all other benchmark rates.
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