Q1. With reference to the Indian economy, consider the following: (I) Public debt (II) Public revenue (III) Open market operations (IV) Bank rate Which of the above is/are component(s) of monetary policy?
Explanation
Monetary policy deals with the regulation of money supply, credit, and interest rates, mainly through the central bank. Open market operations are a core monetary-policy instrument because the central bank buys or sells securities to manage liquidity. The bank rate is also a monetary-policy rate used to influence the cost of credit. Public debt and public revenue belong mainly to fiscal policy, since they relate to government borrowing and government income. Therefore, the monetary-policy components in the list are open market operations and the bank rate.