SSC CGL 2025 Tier-I · 23 September 2025, Shift 1 · General Awareness · Question 19 of 100

We transcribed this text from the pictures on a candidate's response sheet for this shift; the answer is the key SSC colour-marked on that sheet. Solution last reviewed 13 September 2026.

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SSC does not publish CGL question papers or a public answer key. From 2025 the candidate response sheet prints every question and option as a picture, so the text here is transcribed from those pictures for this shift and checked against them independently; where the layout carries meaning, the picture is shown as well. Each answer is the key SSC colour-marked on that sheet. SSC released a tentative key for challenge and later its final one, both only to candidates behind a login, and the sheet does not say which of the two it carries. The solutions are written by UnlockIAS.

Read the below statements marked as Assertion (A) and Reason (R). Mark the correct option: Assertion (A): Financial intermediaries are essential in transmitting monetary policy to the real economy. Reason (R): They adjust lending and deposit rates in response to policy rates set by the MPC.

(a)Both A and R are true, and R is the correct explanation of A.
(b)Both A and R are true, but R is not the correct explanation of A.
(c)A is true, but R is false.
(d)A is false, but R is true.

Answer

Why

Correct — A. A is true. The RBI sets the repo rate, but households and firms borrow from banks and other lenders, not from the RBI. A policy change reaches the real economy only through them.

R is true and explains A. Intermediaries reprice loans and deposits after the Monetary Policy Committee moves the policy rate. That repricing is the transmission A calls essential → option (a).

Why the others are wrong

(b)
Both A and R are true, but R is not the correct explanation of A. — R is the mechanism, not a side fact. Adjusting lending and deposit rates to the policy rate is exactly how intermediaries transmit monetary policy, so R explains A.
(c)
A is true, but R is false. — R is true. Banks revise their lending and deposit rates after the MPC changes the repo rate. That pass-through is how a rate decision reaches borrowers and savers.
(d)
A is false, but R is true. — A is true. Without intermediaries passing a rate change on to borrowers and savers, a repo-rate decision would not change what households and firms pay or earn.

Concept

Monetary policy transmission is the chain from a policy-rate decision to spending, investment and inflation. In India the Monetary Policy Committee sets the policy repo rate, the rate at which the RBI lends to banks.

Banks and other financial intermediaries stand between that rate and the public. When they pass a change on to loan and deposit rates, borrowing costs move and demand responds.

Key facts

The Monetary Policy Committee has six members: three from the RBI and three external members nominated by the Government of India.
The RBI Governor chairs the MPC, which was set up after the RBI Act, 1934 was amended in 2016.
The inflation target set for the MPC up to March 2026 was 4 per cent CPI inflation, within a band of 2 to 6 per cent.
The repo rate is the rate at which the RBI lends to banks, and it is the MPC's policy rate.

Study next

Channels of monetary transmission: interest rate, credit, exchange rate and asset pricesRepo rate, reverse repo rate and the Standing Deposit FacilityWhy banks link floating-rate loans to an external benchmark

Common traps

Choosing (b) because R describes an action rather than a principle. That action is the transmission A refers to.
Thinking the RBI lends to households directly. Its rate reaches them only through banks and other lenders.

Here monetary policy is tested as an Assertion–Reason pair about who carries a rate change to the public. R names the mechanism, so it is the explanation, not a separate true fact.

Related PYQs

No directly related past PYQ was found.

Topic: General Policy — all 308 SSC CGL questions on it, every solved shift.