Monetary & Fiscal Policy MCQ — 688 Practice Questions with Answers

Explanation

The Standing Deposit Facility (SDF) was introduced in April 2022 as the floor of the LAF corridor, replacing the reverse repo rate as the effective lower bound.

Explanation

Statement 1 is correct: MoSPI reported all-India CPI inflation at 0.25% for October 2025, the lowest year-on-year inflation of the current CPI series. Statement 2 is incorrect: October 2025 was not the first breach of the 2% lower tolerance band, because September 2025 CPI inflation was already 1.54% and below 2%. Therefore, only statement 1 is correct.

Explanation

Statement 1 is correct because LRS permits resident individuals to remit up to US$ 250,000 per financial year for permitted current or capital account transactions. Statement 2 is correct because the general UPI peer-to-peer limit is ₹1 lakh per transaction. Statement 3 is incorrect because the Sovereign Gold Bond limit is 4 kg per individual per fiscal year; 20 kg applies to trusts and similar entities. Statement 4 is correct because NIM is calculated as interest income minus interest expense divided by average earning assets.

Explanation

The Repo Rate is the rate at which RBI lends short-term money to commercial banks against government securities. It is the primary tool for controlling inflation.

Explanation

Under RBI's current operating framework, the LAF corridor is bounded by the Standing Deposit Facility (SDF) rate as the floor and the Marginal Standing Facility (MSF) rate as the ceiling, with the policy repo rate placed inside the corridor.