Money Banking

With reference to Indian economy, consider the following:

  1. Bank rate 
  2. Open market operations 
  3. Public debt 
  4. Public revenue

Which of the above is/are component / components of Monetary Policy?

  1. 1 only
  2. 2, 3 and 4
  3. 1 and 2
  4. 1, 3 and 4

Answer

Monetary policy refers to the credit control measures adopted by the central bank of a country (RBI in India). The instruments of monetary policy are of two types: quantitative and qualitative. They affect the level of aggregate demand through the supply of money, cost of money and availability of credit.

Of the two types of instruments, the first category includes bank rate variations, open market operations and changing reserve requirements.

Public debt and public revenue comes under Fiscal policy and not Monetary policy.

The correct option is C.