11. How does an increase in the bank rate affect the economy?
a) Reduces borrowing costs for commercial banks
b) Encourages banks to lend less to businesses and individuals
c) Increases money supply in the economy
d) None of the above
12. What is the relationship between inflation and monetary policy?
a) Monetary policy has no impact on inflation
b) Monetary policy directly controls inflation
c) Monetary policy indirectly influences inflation
d) Monetary policy and inflation are unrelated
13. What is the role of the Reserve Bank of India in managing exchange rate stability?
a) Setting specific exchange rate targets
b) Directly intervening in currency markets to control exchange rates
c) Influencing exchange rates through monetary policy measures
d) All of the above
14. Which of the following is an expansionary monetary policy measure?
a) Increasing the repo rate
b) Decreasing the reverse repo rate
c) Decreasing the bank rate
d) Increasing the cash reserve ratio
15. How does the Reserve Bank of India control the money supply in the economy?
a) By printing more currency notes
b) By influencing interest rates
c) By regulating the flow of foreign currency
d) By controlling government expenditure
