Inflation and Monetary Policies

Q. How does the RBI control inflation and deflation in the economy?

1. By increasing loans
2. Through fiscal policies
3. Through monetary policies
4. By reducing deposits

Q. What is an increase in the general price level in an economy called?

1. Expansion
2. Overpricing
3. Inflation
4. Deflation

Q. Inflation occurs when the supply of money is than the availability of good and services in an economy.

1. more
2. less
3. equal

Q. Which of the following does the RBI do to control inflation?

1. Regulates money supply in the economy
2. Gives free commodities to all
3. Stops the circulation of money totally
4. Controls the spending capacity of people

Q. The RBI introduces fiscal policies to regulate the prices and the money supply in the economy.

1. True
2. False

Q. The Indian economy experienced a great inflation in the past few years.

What could the RBI do to control this situation in the country?

1. RBI could decrease the money circulation in the economy.
2. RBI could increase the money supply in the economy.
3. RBI could decrease the interest rates on loans.
4. RBI could decreases the interest rates on deposits in banks.