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Role of RBI in Economic Planning and Policy Implementation

Description: This quiz is designed to assess your understanding of the role of the Reserve Bank of India (RBI) in economic planning and policy implementation in India.
Number of Questions: 15
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Tags: rbi economic planning policy implementation indian economy
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What is the primary objective of the Reserve Bank of India (RBI) in economic planning?

  1. To promote economic growth and development

  2. To control inflation

  3. To maintain a stable exchange rate

  4. To regulate the financial system


Correct Option: A
Explanation:

The primary objective of the RBI is to promote economic growth and development by ensuring price stability, financial stability, and a sound financial system.

Which of the following is not a function of the RBI in economic planning?

  1. Formulating monetary policy

  2. Managing foreign exchange reserves

  3. Regulating the capital market

  4. Providing financial assistance to the government


Correct Option: D
Explanation:

The RBI does not provide financial assistance to the government. This is the responsibility of the Ministry of Finance.

What is the main instrument of monetary policy used by the RBI?

  1. Open market operations

  2. Bank rate

  3. Cash reserve ratio (CRR)

  4. Statutory liquidity ratio (SLR)


Correct Option:
Explanation:

The repo rate is the main instrument of monetary policy used by the RBI. It is the rate at which the RBI lends money to commercial banks.

What is the role of the RBI in managing foreign exchange reserves?

  1. To maintain a stable exchange rate

  2. To facilitate international trade and payments

  3. To prevent excessive volatility in the foreign exchange market

  4. All of the above


Correct Option: D
Explanation:

The RBI manages foreign exchange reserves to maintain a stable exchange rate, facilitate international trade and payments, and prevent excessive volatility in the foreign exchange market.

What is the role of the RBI in regulating the capital market?

  1. To protect investors

  2. To ensure fair and orderly trading

  3. To prevent insider trading and market manipulation

  4. All of the above


Correct Option: D
Explanation:

The RBI regulates the capital market to protect investors, ensure fair and orderly trading, and prevent insider trading and market manipulation.

What is the role of the RBI in implementing government policies?

  1. To provide financial assistance to the government

  2. To manage the government's debt

  3. To act as the government's banker

  4. All of the above


Correct Option: D
Explanation:

The RBI provides financial assistance to the government, manages the government's debt, and acts as the government's banker.

What is the role of the RBI in promoting financial inclusion?

  1. To provide banking services to the unbanked and underbanked population

  2. To promote financial literacy and awareness

  3. To encourage the use of digital financial services

  4. All of the above


Correct Option: D
Explanation:

The RBI promotes financial inclusion by providing banking services to the unbanked and underbanked population, promoting financial literacy and awareness, and encouraging the use of digital financial services.

What is the role of the RBI in maintaining financial stability?

  1. To regulate the financial system

  2. To supervise banks and other financial institutions

  3. To resolve financial crises

  4. All of the above


Correct Option: D
Explanation:

The RBI maintains financial stability by regulating the financial system, supervising banks and other financial institutions, and resolving financial crises.

What is the role of the RBI in promoting economic growth?

  1. To provide financial assistance to businesses

  2. To promote investment and entrepreneurship

  3. To create a favorable investment climate

  4. All of the above


Correct Option: D
Explanation:

The RBI promotes economic growth by providing financial assistance to businesses, promoting investment and entrepreneurship, and creating a favorable investment climate.

What is the role of the RBI in controlling inflation?

  1. To formulate monetary policy

  2. To manage the money supply

  3. To regulate the prices of goods and services

  4. All of the above


Correct Option: D
Explanation:

The RBI controls inflation by formulating monetary policy, managing the money supply, and regulating the prices of goods and services.

What is the role of the RBI in managing the government's debt?

  1. To issue government bonds and securities

  2. To manage the government's borrowing program

  3. To ensure that the government's debt is sustainable

  4. All of the above


Correct Option: D
Explanation:

The RBI manages the government's debt by issuing government bonds and securities, managing the government's borrowing program, and ensuring that the government's debt is sustainable.

What is the role of the RBI in acting as the government's banker?

  1. To hold the government's deposits

  2. To make payments on behalf of the government

  3. To provide financial advice to the government

  4. All of the above


Correct Option: D
Explanation:

The RBI acts as the government's banker by holding the government's deposits, making payments on behalf of the government, and providing financial advice to the government.

What is the role of the RBI in promoting financial inclusion?

  1. To provide banking services to the unbanked and underbanked population

  2. To promote financial literacy and awareness

  3. To encourage the use of digital financial services

  4. All of the above


Correct Option: D
Explanation:

The RBI promotes financial inclusion by providing banking services to the unbanked and underbanked population, promoting financial literacy and awareness, and encouraging the use of digital financial services.

What is the role of the RBI in maintaining financial stability?

  1. To regulate the financial system

  2. To supervise banks and other financial institutions

  3. To resolve financial crises

  4. All of the above


Correct Option: D
Explanation:

The RBI maintains financial stability by regulating the financial system, supervising banks and other financial institutions, and resolving financial crises.

What is the role of the RBI in promoting economic growth?

  1. To provide financial assistance to businesses

  2. To promote investment and entrepreneurship

  3. To create a favorable investment climate

  4. All of the above


Correct Option: D
Explanation:

The RBI promotes economic growth by providing financial assistance to businesses, promoting investment and entrepreneurship, and creating a favorable investment climate.

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