Question

Q. With respect to the Monetary Policy Framework Agreement between the Central Government and RBI, if inflation goes above 6% or below 2% for three successive quarters, then:

• A. The central government can come out from the Monetary Policy Framework Agreement.
• B. The central government may give the task of managing inflation to some other agency in consultation with the RBI.
• C. RBI has to explain to the central government listing causes and measures 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 explain to the central government listing causes and measures to bring inflation under control.

Explanation:

If inflation goes above 6% or below 2% for three successive quarters, then RBI has to explain to the government listing causes and measures to bring inflation under control.