Question : What is the role of the central bank in the budget?

Option 1: To create the budget

Option 2: To approve the budget

Option 3: To implement the budget

 

Option 4: To regulate the money supply

Correct Answer: To regulate the money supply

Solution : The correct answer is (d) To regulate the money supply.

While the central bank does not typically have a direct role in creating, approving, or implementing the government budget, its primary role is to regulate the money supply and oversee monetary policy.

The central bank is responsible for controlling and managing the country's money supply, which includes activities such as setting interest rates, conducting open market operations, and implementing monetary policy tools. By regulating the money supply, the central bank aims to achieve macroeconomic objectives such as price stability, low inflation, and sustainable economic growth.

The government budget, on the other hand, is primarily created and approved by the executive and legislative branches of the government. It outlines the government's planned revenue and expenditure for a specific period and serves as a financial plan for the allocation of resources.

While the central bank's monetary policy decisions can have an impact on the overall economy and fiscal conditions, the direct responsibility for creating, approving, and implementing the government budget lies with the relevant government authorities.