28 questions from UPSC CSE Prelims GS Paper 1 on Monetary Policy & Money Supply (Indian Economy). Spanning from 1995 to 2023. Practice with show/hide answers and detailed explanations.
What UPSC Asks About Monetary Policy & Money Supply
Based on 28 questions across 18 years, UPSC has consistently tested aspirants' understanding of Monetary Policy & Money Supply within the broader Indian Economy syllabus. The questions range from factual recall to application-based analysis.
Recent trends show UPSC moving towards statement-based questions that combine multiple aspects of Monetary Policy & Money Supply. Aspirants should focus on understanding concepts rather than memorizing isolated facts.
Q: Consider the following statements:
Statement-I: In the post-pandemic recent past, many Central Banks worldwide had carried out interest rate hikes.
Statement-II: Central Banks generally assume that they have the ability to counteract the rising consumer prices via monetary policy means.
Which one of the following is correct in respect of the above statements?
(a)Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I
(b)Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I
(c)Statement-I is correct but Statement-II is incorrect
(d)Statement-I is incorrect but Statement-II is correct
Q: With reference to the Indian economy, consider the following statements:
1. If the inflation is too high, Reserve Bank of India (RBI) is likely to buy government securities.
2. If the rupee is rapidly depreciating, RBI is likely to sell dollars in the market.
3. If interest rates in the USA or European Union were to fall, that is likely to induce RBI to buy dollars.
Which of the statements given above are correct?
Q: भारत में, 'अंतिम उपायकर्ता (Lender of Last Resort)' के रूप में केन्द्रीय बैंक के कार्यों में सामान्यतः निम्नलिखित में से क्या सम्मिलित है/हैं?
1. अन्य स्रोतों से ऋण प्राप्ति में विफल होने पर व्यापार एवं उद्योग निकायों को ऋण प्रदान करना
2. अस्थायी संकट के समय बैंकों के लिए चलनिधि उपलब्ध कराना
3. विभिन्न ऋणों के वित्तपोषण के लिए सरकार को ऋण देना
नीचे दिए गए कूट का प्रयोग कर सही उत्तर चुनिए।
Q: यदि आप अपने बैंक के माँग जमा खाते (Demand Deposit Account) से ₹ 1,00,000 की नगद राशि निकालते हैं, तो अर्थव्यवस्था में तात्कालिक रूप से मुद्रा की समग्र पूर्ति पर इसका क्या प्रभाव पड़ेगा ?
(a)मुद्रा की समग्र पूर्ति में ₹ 1,00,000 की कमी आएगी
(b)मुद्रा की समग्र पूर्ति में ₹ 1,00,000 की वृद्धि होगी
(c)मुद्रा की समग्र पूर्ति में ₹ 1,00,000 से अधिक की वृद्धि होगी
Q: यदि आर.बी.आई. संचालक मौद्रिक नीति के अनुसार कार्य करने पर विवश होता है, तो वह निम्नलिखित में से क्या नहीं करेगा?
1. वैधानिक तरलता अनुपात को घटाकर उसे अवशोषित करना
2. सीमांत स्थायी सुविधा दर को बढ़ाना
3. रेपो दर को घटाना तथा रिवर्स रेपो दर को भी घटाना
नीचे दिए गए कूट का प्रयोग कर सही उत्तर चुनिए:
Q: मौद्रिक नीति समिति (Monetary Policy Committee/MPC) के सम्बन्ध में निम्नलिखित कथनों में से कौन-सा/से सही है/हैं ?
1. यह RBI की नीतिगत (बेंचमार्क) ब्याज दर का निर्धारण करती है।
2. यह एक 12-सदस्यीय निकाय है जिसमें RBI का गवर्नर भी शामिल होता है तथा वर्ष में कम से कम चार बैठकें होती हैं।
3. यह केन्द्रीय वित्त मंत्री की अध्यक्षता में कार्य करती है।
नीचे दिये गये कूट का प्रयोग कर सही उत्तर चुनिए :
Q: With reference to Indian economy, consider the following:
1. Bank rate
2. Open market operations
3. Public debt
4. Public revenue
Which of the above is/are component/components of Monetary Policy?
Q: In the context of Indian economy, which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements’?
1. To enable the Central Bank to control the amount of advances the banks can create
2. To make the people’s deposits with banks safe and liquid
3. To prevent the commercial banks from making excessive profits
4. To force the banks to have sufficient vault cash to meet their day-to-day requirements
Select the correct answer using the code given below.
Q: Consider the following liquid assets:
1. Demand deposits with the banks
2. Time deposits with the banks
3. Savings deposits with the banks
4. Currency
The correct sequence of these assets in the decreasing order of liquidity is
Q: Which of the following measures would result in an increase in the money supply in the economy?
1. Purchase of government securities from the public by the Central Bank
2. Deposit of currency in commercial banks by the public
3. Borrowing by the government from the Central Bank
4. Sale of government securities to the public by the Central Bank
Select the correct answer using the codes given below:
Q: Consider the following statements:
1. The repo rate is the rate at which other banks borrow from the Reserve Bank of India.
2. A value of 1 for the Gini Coefficient in a country implies that there is perfectly equal income for everyone in its population.
Which of the statements given above is/are correct?
Q: Consider the following:
1. Currency with the public
2. Demand deposits with banks
3. Time deposits with banks
Which of these are included in Broad Money (M3) in India?
Q: The sum of which of the following constitutes Broad Money in India?
I. Currency with the Public
II. Demand deposits with banks
III. Time deposits with banks
IV. Other deposits with RBI
Choose the correct answer using the codes given below:
(a)paid by the Reserve Bank of India on the deposits of Commercial Banks
(b)charged by Banks on loans and advances
(c)payable on Bonds
(d)at which the Reserve Bank of India discounts the Bills of Exchange
Frequently Asked Questions
How many UPSC Prelims questions have been asked from Monetary Policy & Money Supply?▼
UPSC has asked 28 questions on Monetary Policy & Money Supply in GS Paper 1 Prelims between 1995 and 2023. This sub-topic falls under Indian Economy.
In which years has UPSC asked about Monetary Policy & Money Supply?▼
Questions on Monetary Policy & Money Supply have appeared in UPSC Prelims in the following years: 2023, 2022, 2021, 2020, 2019, 2018, 2017, 2015, 2014, 2013, 2012, 2011, 2010, 2007, 2002, 1998, 1997, 1995. The topic has appeared in 18 out of 31 years.
What is the difficulty level of Monetary Policy & Money Supply questions in UPSC Prelims?▼
Among 28 questions on Monetary Policy & Money Supply: 15 are easy, 13 are moderate, and 0 are difficult. Most questions test conceptual understanding of the topic.
