UPSC General Studies Sample Paper General Studies Sample Paper-9

  • question_answer
    Which one of the following statements is incorrect?                                      

    A)  Monetary policy is the series of actions taken by a Central Bank to determine the conditions which it supplies the money that circulates in the economy, through which it influences the behaviour of short-term interest rates                                                               

    B)  The goals of monetary policy has been a defining issue for economists and public opinion since central banks  were consolidated as entities responsible for providing economies with currency  implementing monetary policy                                                           

    C)  The government can use monetary policy to influence the price-setting process and thereby me inflation target                                                                           

    D)  The Central Bank supplies liquidity to money market participants, either by changing some headings of its balance or by adopting measures that have a more direct influence on short-term interest

    Correct Answer: C

    Solution :

    [c] The government does not-use monetary policy it's the Central Bank of the country that use the monetary policy to influence the price-setting process and thereby meet its inflation target. Generally speaking, Central Banks conduct monetary policy by affecting the conditions under which the economy E liquidity needs are met.

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