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Demand vs Quantity Demanded

Which of the ...

Question

Which of the following is / are true about Monetary Policy Committee?

1. It is headed by the RBI governor.
2. Every 6 months it has to bring out a report on present trends and future expectations of Inflation.

A

1 only

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B

2 only

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C

Both 1 and 2

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D

None of the Above

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Solution

The correct option is C Both 1 and 2
 The MPC is a statutory and institutionalized framework under the RBI Act, 1934, for maintaining price stability, while keeping in mind the objective of growth.

The MPC determines the policy interest rate (repo rate) required to achieve the inflation target (4% + 2). The Governor of RBI is ex-officio Chairman of the MPC. Every 6 months it has to bring out a report on present trends and future expectations of Inflation.

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Q. Which of the following is / are true about monetary policy committee
1. It is headed by the RBI governor
2. Every 6 months it has to bring out a report on present trends and future expectations of Inflation

Q.  In the context of the recommendations made by the Urjit Patel committee , which of the following is correct?

1. To adopt the new Consumer Price Index (CPI) for anchoring the monetary policy.
2. Set the inflation target at 4% with a band of +/- 2% .
3. Monetary policy decision making should be vested in a Monetary Policy Committee (MPC) headed by the Governor.

Q. As per the Monetary Policy Framework Agreement the RBI has to maintain the inflation at

Consider the following statements related to various committees formed by government or RBI and choose the incorrect statement(s):-

Codes :

1 and 3 only
All of these
None of these
1 only

Q. Read the extract given below and answer the questions that follow:
Aug 17, 2015
Mumbai Bankers today said, the sharp fall in inflation to 3.38% for July has raised hopes of another rate cut by RBI at September review of the policy. "Obviously, if more and more and more positive news on inflating front comes. It's a reasonable expectation to expect that rules will be out at the September policy", reported Mr. Aditya Puri the Managing Director of HDFC bank. He said the Governor of RBI, Mr. Raghuram Rajan had earlier said that RBI is actively looking at rate cut.
i. Name the policy implemented by RBI to control and regulate money supply.
ii. Define creeping inflation. What is its impact on the economy?
iii. Explain how the following measures are adopted by RBI to control inflation:
1. Change in Reserve Ratio
2. Credit Rationing.

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