UPSC 2022: 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?

The correct answer is option (b): 2 and 3 only. Watch the detailed video explanation in our Sherlocking Prelims course on UnlockIAS.

This question was asked in UPSC CSE Prelims 2022, GS Paper 1, as Question 3. It falls under Indian Economy > Monetary Policy & Money Supply.

This question is rated "moderate". It requires sound conceptual understanding of the topic.

UPSC has asked 27 questions from Monetary Policy & Money Supply (under Indian Economy) across multiple years. Visit the topic page to see the full list and year-wise trends.