Question : ___________ is a process where the central bank reduces the money supply in the economy.
Option 1: Contractionary monetary policy
Option 2: Expansionary monetary policy
Option 3: Quantitative easing
Option 4: Open market operations
Correct Answer: Contractionary monetary policy
Solution : The correct answer is (a) Contractionary monetary policy.
Contractionary monetary policy refers to the actions taken by the central bank to reduce the money supply in the economy, typically with the aim of controlling inflation and curbing excessive economic growth.
Contractionary monetary policy is employed when there is a need to control inflationary pressures or to address an overheating economy with excessive credit growth.
Question : Which policy measures are generally used to reduce unemployment in an economy?
Option 1: Expansionary fiscal and monetary policies
Option 2: Contractionary fiscal and monetary policies
Option 3: Structural and supply-side policies
Option 4: None of the above
Question : Which of the following is not a tool of quantitative instruments of monetary policy?
Option 1: Open market operations
Option 2: Margin requirements
Option 3: Repo rate
Option 4: Bank rate
Question : Dear money policy of the central bank, which is used to keep growth steady and in line with other economic factors, refers to
Option 1: Tightening the money supply in the economy
Option 2: Easing the money supply in the economy.
Option 3: Allow commercial banks to work in a less strict environment
Option 4: Both (b) and (c)
Question : The government's policy of reducing taxes to stimulate economic growth is known as ____________.
Option 1: Austerity measures
Option 2: Expansionary fiscal policy
Option 3: Contractionary fiscal policy
Option 4: Supply-side economics
Question : Identify the false statement.
Option 1: RBI decides the bank rate for the economy.
Option 2: SEBI conducts open market operations to regulate money supply in the economy.
Option 3: RBI prints the 100 currency notes.
Option 4: Ministry of Finance issues 1 rupee coin.
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile