Question

Q. According to the Monetary Policy Framework Agreement, if inflation goes above 6% or below 2% for three successive quarters, then in that case:

• A. The Central government can come out from the Monetary Policy Framework Agreement.
• B. The Central government can give the task of managing inflation to some other agency.
• C. RBI has to give an explanation to the government listing out causes and the framework to bring inflation under control.
• D. Nothing will happen and there will be business as usual.

Answer 1

The correct option is C RBI has to give an explanation to the government listing out causes and the framework to bring inflation under control.

Explanation:

If Inflation goes above 6% or below 2% for three successive quarters, then the RBI has to give an explanation to the government listing out causes and the framework to bring inflation under control.