🟢 EASY LEVEL (1–40)

1. Who formulates the monetary policy in India?

a) Finance Ministry
b) Reserve Bank of India
c) NITI Aayog
d) SEBI
✅ Answer: b) Reserve Bank of India

2. What is the main objective of monetary policy?

a) Increase taxes
b) Price stability
c) Industrial licensing
d) Export control
✅ Answer: b) Price stability

3. Monetary policy is mainly concerned with:

a) Taxation
b) Money supply
c) Budget preparation
d) Import-export control
✅ Answer: b) Money supply

4. Which of these is a quantitative tool of monetary policy?

a) Moral suasion
b) Open Market Operations
c) Margin requirements
d) Credit rationing
✅ Answer: b) Open Market Operations

5. CRR stands for:

a) Central Reserve Requirement
b) Credit Reserve Ratio
c) Cash Reserve Ratio
d) Cash Rate Regulation
✅ Answer: c) Cash Reserve Ratio

6. SLR refers to:

a) Statutory Lending Requirement
b) Statutory Liquidity Ratio
c) Strategic Liquidity Reserve
d) Short-term Lending Rate
✅ Answer: b) Statutory Liquidity Ratio

7. What does Repo Rate signify?

a) Deposit rate offered by banks
b) Lending rate of banks
c) Rate at which RBI lends to commercial banks
d) Rate at which banks lend to RBI
✅ Answer: c) Rate at which RBI lends to commercial banks
8. Reverse Repo Rate means:
a) Banks borrow from RBI
b) RBI borrows from banks
c) RBI lends to Government
d) Banks lend to public
✅ Answer: b) RBI borrows from banks

9. Which of the following is a qualitative instrument?

a) CRR
b) SLR
c) Moral Suasion
d) Bank Rate
✅ Answer: c) Moral Suasion

10. Open Market Operations involve:

a) Lending to foreign banks
b) Sale and purchase of government securities
c) Printing new currency
d) Tax collection
✅ Answer: b) Sale and purchase of government securities

11. Which of the following tools is used to absorb excess liquidity?

a) Decrease CRR
b) Increase in Repo Rate
c) Purchase of govt securities
d) Sale of govt securities
✅ Answer: d) Sale of govt securities

12. The purpose of SLR is to:

a) Provide loans to farmers
b) Control inflation
c) Ensure bank solvency
d) Increase foreign exchange
✅ Answer: c) Ensure bank solvency

13. An increase in Repo Rate leads to:

a) Cheaper loans
b) More liquidity
c) Costlier borrowing
d) Lower interest rate
✅ Answer: c) Costlier borrowing

14. Which of the following is not a tool of monetary policy?

a) CRR
b) Direct taxes
c) SLR
d) Bank rate
✅ Answer: b) Direct taxes

15. Which of the following reduces inflation?

a) Decrease CRR
 b) Increase Repo Rate
c) Decrease SLR
d) Decrease Bank Rate
✅ Answer: b) Increase Repo Rate

16. Expansionary monetary policy is used during:

a) Inflation
b) Depression
c) Deflation
d) Both b and c
✅ Answer: d) Both b and c

17. The bank rate is:

a) Rate of interest charged on personal loans
b) Rate charged by RBI on long-term loans to banks
c) Fixed deposit interest
d) Rate offered on savings account
✅ Answer: b) Rate charged by RBI on long-term loans to banks

18. Which policy controls inflation directly?

a) Fiscal policy
b) Monetary policy
c) Trade policy
d) Industrial policy
✅ Answer: b) Monetary policy

19. SLR is maintained in the form of:

a) Gold only
b) Cash only
c) Cash, gold, and govt securities
d) Only foreign exchange
✅ Answer: c) Cash, gold, and govt securities

20. Which of these increases money supply?

a) Increase in CRR
b) Increase in Repo rate
c) Decrease in SLR
d) Sale of government securities
✅ Answer: c) Decrease in SLR

21. Which policy deals with money supply and interest rates?
a) Industrial
b) Trade
c) Fiscal
d) Monetary
✅ Answer: d) Monetary

22. Increase in CRR will:

a) Increase money supply
b) Reduce money supply
c) Increase liquidity
 d) Promote inflation
✅ Answer: b) Reduce money supply

23. Which is not a monetary tool?

a) Repo rate
b) VAT
c) CRR
d) Open Market Operations
✅ Answer: b) VAT

24. Credit rationing is a:

a) Fiscal measure
b) Budgetary policy
c) Qualitative tool
d) Quantitative tool
✅ Answer: c) Qualitative tool

25. Monetary policy influences:

a) Tax collection
b) Money supply and credit
c) GDP directly
d) Export-import
✅ Answer: b) Money supply and credit

26. Which of the following is a short-term policy measure?

a) Monetary policy
b) Industrial policy
c) Trade policy
d) Investment policy
✅ Answer: a) Monetary policy

27. Who benefits from expansionary monetary policy?

a) Importers
b) Borrowers
c) RBI
d) Exporters only
✅ Answer: b) Borrowers

28. Qualitative instruments aim to control:

a) Quantity of credit
b) Direction of credit
c) Budget size
d) Imports
✅ Answer: b) Direction of credit

29. Monetary policy tightening refers to:

a) Easing money supply
b) Making credit cheaper
c) Raising interest rates
d) Increasing subsidies
✅ Answer: c) Raising interest rates
30. Repo rate affects:
a) Export rates
b) Government budget
c) Lending rates of banks
d) Agricultural prices
✅ Answer: c) Lending rates of banks

31. Which of the following is inflation targeting?

a) Fiscal deficit control
b) GDP targeting
c) Keeping inflation within a target range
d) Expenditure management
✅ Answer: c) Keeping inflation within a target range

32. Moral suasion includes:

a) CRR change
b) Advice or persuasion
c) Repo rate
d) SLR
✅ Answer: b) Advice or persuasion

33. Higher SLR reduces:

a) Bank reserves
b) Inflation
c) Lending capacity of banks
d) Repo rate
✅ Answer: c) Lending capacity of banks

34. Monetary policy impacts:

a) Tax system
b) Employment
c) Credit creation
d) Industrial policy
✅ Answer: c) Credit creation

35. Selective credit control aims to:

a) Control money laundering
b) Prevent smuggling
c) Curb inflation in essential goods
d) Promote subsidies
✅ Answer: c) Curb inflation in essential goods

36. Which of these is not a goal of monetary policy?

a) Economic growth
b) Price stability
c) Budget planning
d) Exchange rate stability
✅ Answer: c) Budget planning

37. Monetary easing means:

a) Raising interest rates
 b) Tightening money supply
c) Reducing interest rates
d) Selling government securities
✅ Answer: c) Reducing interest rates

38. Which of these helps reduce inflation?

a) Reducing CRR
b) Increasing SLR
c) Increasing bank lending
d) Cutting repo rate
✅ Answer: b) Increasing SLR

39. Which of these instruments is market-based?

a) Open Market Operations
b) SLR
c) CRR
d) Moral Suasion
✅ Answer: a) Open Market Operations

40. Monetary policy transmission refers to:

a) Budget passing in parliament
b) RBI lending directly to public
c) How policy changes affect the economy
d) Bank licensing system
✅ Answer: c) How policy changes affect the economy

✅ Shall I continue from 41 to 100 (Medium and Hard)?

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yes

ChatGPT said:

Here’s the continuation of the complete 100 MCQ set for Chapter 8: Money Market – Unit 3:
Monetary Policy, from 41 to 100 (Medium + Hard). No skipping. Categorized for best retention.

🟡 MEDIUM LEVEL (41–80)

41. Which of the following is not a quantitative tool of monetary policy?

a) CRR
b) SLR
c) Open Market Operations
d) Margin Requirements
✅ Answer: d) Margin Requirements

42. Liquidity Adjustment Facility (LAF) includes:

a) CRR and SLR
b) Repo and Reverse Repo
c) Moral suasion
 d) Fiscal deficit control
✅ Answer: b) Repo and Reverse Repo

43. An increase in the Reverse Repo Rate encourages banks to:

a) Borrow more from RBI
b) Lend more to the public
c) Park more funds with RBI
d) Reduce interest on deposits
✅ Answer: c) Park more funds with RBI

44. Open Market Operations are used to:

a) Provide subsidies
b) Adjust government spending
c) Regulate liquidity
d) Print money
✅ Answer: c) Regulate liquidity

45. Which of the following is used during inflation control?

a) Decrease in CRR
b) Decrease in Repo Rate
c) Increase in Bank Rate
d) Increase in government spending
✅ Answer: c) Increase in Bank Rate

46. Tight monetary policy leads to:

a) More credit creation
b) Higher interest rates
c) Increase in money supply
d) Higher inflation
✅ Answer: b) Higher interest rates

47. Which one is a selective credit control tool?

a) SLR
b) Open Market Operation
c) Margin Requirement
d) Bank Rate
✅ Answer: c) Margin Requirement

48. What happens when the RBI sells government securities?

a) Liquidity increases
b) Inflation rises
c) Liquidity decreases
d) Repo rate falls
✅ Answer: c) Liquidity decreases

49. RBI uses which tool to curb excess demand?

a) Reducing SLR
b) Increasing Repo Rate
c) Buying bonds
d) Decreasing CRR
✅ Answer: b) Increasing Repo Rate
50. Which of these tools is used to regulate the direction of credit?
a) Bank Rate
b) CRR
c) Moral Suasion
d) SLR
✅ Answer: c) Moral Suasion

51. If RBI increases CRR, what happens to money supply?

a) Increases
b) No change
c) Decreases
d) Doubles
✅ Answer: c) Decreases

52. Monetary policy is ineffective if:

a) Banks have high NPAs
b) Fiscal deficit is high
c) People hoard cash
d) All of the above
✅ Answer: d) All of the above

53. Bank Rate Policy is suitable for:

a) Long-term credit control
b) Import-export regulation
c) Reducing fiscal deficit
d) Subsidy provision
✅ Answer: a) Long-term credit control

54. What is the impact of expansionary monetary policy?

a) Reduces inflation
b) Increases interest rates
c) Stimulates economic activity
d) Increases CRR
✅ Answer: c) Stimulates economic activity

55. Which of these can cause policy transmission lags?

a) Informal credit channels
b) Delay in interest rate revision
c) Poor banking infrastructure
d) All of the above
✅ Answer: d) All of the above

56. Which of the following lowers credit growth?

a) Decreasing Repo Rate
b) Increasing CRR
c) Increasing Open Market Purchases
d) Lowering SLR
✅ Answer: b) Increasing CRR

57. Which is the target inflation rate under RBI's inflation targeting framework (as of recent
years)?
 a) 2% ± 1%
b) 4% ± 2%
c) 6% ± 2%
d) 5% ± 3%
✅ Answer: b) 4% ± 2%

58. Who chairs the Monetary Policy Committee (MPC)?

a) Finance Minister
b) Prime Minister
c) RBI Governor
d) Chief Economic Advisor
✅ Answer: c) RBI Governor

59. Which monetary tool can directly influence demand?

a) CRR
b) Repo rate
c) Moral suasion
d) SLR
✅ Answer: b) Repo rate

60. Which of the following is true about inflation targeting?

a) Inflation control is secondary
b) Fixed interest rate target is set
c) Government controls monetary tools
d) Central bank targets inflation range
✅ Answer: d) Central bank targets inflation range

61. In contractionary monetary policy, the central bank will likely:

a) Reduce bank rate
b) Buy government securities
c) Increase CRR
d) Reduce SLR
✅ Answer: c) Increase CRR

62. Which is more effective in curbing demand-pull inflation?

a) SLR
b) CRR
c) Repo rate
d) Moral suasion
✅ Answer: c) Repo rate

63. Marginal Standing Facility (MSF) allows banks to borrow:

a) Unlimited funds
b) Up to 1% of NDTL
c) At the repo rate
d) For non-priority sectors
✅ Answer: b) Up to 1% of NDTL

64. Which is the rate at which RBI absorbs liquidity?

a) Repo rate
b) Reverse repo rate
 c) MSF rate
d) Bank rate
✅ Answer: b) Reverse repo rate

65. The base rate system in banks is replaced by:

a) BPLR
b) MCLR
c) MSF
d) LAF
✅ Answer: b) MCLR

66. Tight monetary policy discourages:

a) Inflation
b) Savings
c) Interest rates
d) Imports
✅ Answer: a) Inflation

67. The monetary policy stance of RBI is communicated:

a) Every month
b) Quarterly
c) Annually
d) Bi-annually
✅ Answer: b) Quarterly

68. Which is the primary transmission mechanism of monetary policy?

a) Tax cuts
b) Interest rate
c) Government subsidies
d) Bank lending
✅ Answer: b) Interest rate

69. Liquidity trap occurs when:

a) Interest rates are too high
b) Banks refuse to lend
c) Monetary policy fails to increase demand
d) Banks increase repo rate
✅ Answer: c) Monetary policy fails to increase demand

70. Which of the following is not done in inflation targeting?

a) Monitoring price levels
b) Adjusting interest rates
c) Targeting fiscal deficit
d) Forecasting inflation
✅ Answer: c) Targeting fiscal deficit

71. Which is the most direct tool of liquidity management?

a) Bank rate
b) CRR
c) Moral suasion
 d) SLR
✅ Answer: b) CRR

72. Which rate acts as a floor in the LAF corridor?

a) Repo rate
b) Bank rate
c) Reverse repo rate
d) SLR
✅ Answer: c) Reverse repo rate

73. Monetary tightening helps in:

a) Reducing inflation
b) Promoting employment
c) Raising deficit
d) Raising exports
✅ Answer: a) Reducing inflation

74. One of the key limitations of monetary policy is:

a) Political influence
b) Time lags
c) Fixed interest rates
d) No effect on inflation
✅ Answer: b) Time lags

75. Flexible inflation targeting was adopted by India in:

a) 2000
b) 2012
c) 2016
d) 2020
✅ Answer: c) 2016

76. MSF is generally ______ than Repo Rate.

a) Higher
b) Lower
c) Same
d) Equal always
✅ Answer: a) Higher

77. Which of these promotes liquidity in the banking system?

a) Increase in CRR
b) Decrease in Repo Rate
c) Increase in SLR
d) Decrease in Reverse Repo Rate
✅ Answer: b) Decrease in Repo Rate

78. Why does RBI use moral suasion?

a) Enforce legal compliance
b) Mandate lending rates
c) Informally influence bank behavior
d) Cancel licenses
✅ Answer: c) Informally influence bank behavior
 79. Monetary policy promotes inclusive growth through:
a) CRR
b) Selective credit control
c) Tax cuts
d) Increase in fiscal deficit
✅ Answer: b) Selective credit control

80. Neutral monetary policy refers to:

a) Stimulative action
b) No change in stance
c) Raising CRR
d) Tightening SLR
✅ Answer: b) No change in stance

Shall I now give you the final 20 Hard-level MCQs (81–100)?

You said:

yes

ChatGPT said:

Here are the final 20 hard-level MCQs (81–100) from Chapter 8: Money Market – Unit 3: Monetary
Policy to complete the full 100-question set. These are conceptual, analytical, and application-based
– perfect for scoring full marks.

🔴 HARD LEVEL (81–100)

81. What is the likely effect of a simultaneous increase in CRR and Repo Rate?
a) Increase in liquidity and credit
b) Contraction of money supply
c) Expansion of credit
d) No significant effect
✅ Answer: b) Contraction of money supply

82. Which of the following reflects a contractionary monetary policy stance?

a) Decrease in CRR and SLR
b) Increase in CRR and Repo Rate
c) Decrease in Repo Rate and Bank Rate
d) Increase in Open Market purchases
✅ Answer: b) Increase in CRR and Repo Rate

83. If the RBI wants to encourage investment, it will most likely:

a) Increase reverse repo rate
b) Decrease CRR
c) Increase SLR
d) Sell government bonds
✅ Answer: b) Decrease CRR
84. The limitation of using Open Market Operations (OMO) is:
a) Only long-term impact
b) Requires developed government securities market
c) Effective only in rural areas
d) Controlled by Ministry of Finance
✅ Answer: b) Requires developed government securities market

85. Which of the following is a long-term monetary instrument?

a) Repo Rate
b) MSF
c) Bank Rate
d) Reverse Repo Rate
✅ Answer: c) Bank Rate

86. In a situation of stagflation, which policy combination is preferred?

a) Tight monetary + expansionary fiscal
b) Expansionary monetary + tight fiscal
c) Expansionary monetary + fiscal
d) Contractionary both
✅ Answer: b) Expansionary monetary + tight fiscal

87. High inflation with slow growth is called:

a) Deflation
b) Recession
c) Stagflation
d) Depression
✅ Answer: c) Stagflation

88. Which monetary tool affects liquidity most immediately?

a) CRR
b) Repo rate
c) Bank rate
d) Moral suasion
✅ Answer: a) CRR

89. The effectiveness of monetary policy increases when:

a) Inflation is demand-pull
b) Banks have excess liquidity
c) Interest rates are rigid
d) Public prefers cash hoarding
✅ Answer: a) Inflation is demand-pull

90. Transmission mechanism fails when:

a) Banks do not revise lending rates
b) Currency value appreciates
c) Demand for money increases
d) Public spending increases
✅ Answer: a) Banks do not revise lending rates

91. What is the corridor within which the RBI’s policy rates operate?
a) Repo and CRR
 b) MSF and SLR
c) Repo and Reverse Repo
d) Bank Rate and Repo
✅ Answer: c) Repo and Reverse Repo

92. The central bank’s dilemma often lies between:

a) Growth and employment
b) Inflation and growth
c) Deficit and tax collection
d) Exports and imports
✅ Answer: b) Inflation and growth

93. Why is moral suasion less effective?

a) Non-binding nature
b) Involves high cost
c) Controlled by Parliament
d) Always compulsory
✅ Answer: a) Non-binding nature

94. During a liquidity trap, monetary policy becomes:

a) Highly effective
b) Useless
c) Slightly effective
d) Dependent on fiscal policy
✅ Answer: b) Useless

95. If inflation persists despite a rise in interest rates, it suggests:

a) Fiscal policy is not aligned
b) Money supply is shrinking
c) Demand has decreased
d) Repo rate is too low
✅ Answer: a) Fiscal policy is not aligned

96. What is a likely consequence of a low reverse repo rate?

a) Banks park more funds with RBI
b) Banks prefer lending over depositing with RBI
c) Inflation is controlled
d) Public reduces borrowing
✅ Answer: b) Banks prefer lending over depositing with RBI

97. The MSF rate is typically:

a) Lower than Reverse Repo
b) Between Repo and Bank Rate
c) Higher than Repo
d) Equal to CRR
✅ Answer: c) Higher than Repo

98. Monetary policy can fail in developing countries due to:

a) High market efficiency
b) Informal financial sector dominance
c) Strong central banking
 d) Excess savings
✅ Answer: b) Informal financial sector dominance

99. In India, the inflation target is based on:

a) WPI
b) CPI (combined)
c) Core inflation
d) GDP Deflator
✅ Answer: b) CPI (combined)

100. Which of the following is an indirect instrument of monetary policy?

a) Repo rate
b) Lending cap
c) Margin requirement
d) Selective credit control
✅ Answer: a) Repo rate

✅ You now have the complete set of 100 MCQs (Easy to Hard) from Chapter 8 – Unit 3: Monetary
Policy to master the topic and score full marks.

Would you like the 30 PYQs (Past Year Questions) for this unit next?

You said:

yes

ChatGPT said:

Here are 30 Past Year Questions (PYQs) from CA Foundation Business Economics – Chapter 8:
Money Market, Unit 3 – Monetary Policy. These are actual or closely modelled on ICAI’s previous
exams and mock tests, aligned with ICAI's style and difficulty.

📘 30 PYQs – Monetary Policy (Unit 3)

1. Which of the following is not a function of the Reserve Bank of India?

a) Issuing currency
b) Controlling credit
c) Preparing the Union Budget
d) Acting as banker’s bank
✅ Answer: c) Preparing the Union Budget

2. Which of the following is not a quantitative measure of credit control?

a) Bank Rate
b) Open Market Operations
c) CRR
d) Moral Suasion
✅ Answer: d) Moral Suasion

3. Open Market Operations refer to:

a) Buying and selling of government securities by RBI
 b) Selling public assets to private companies
c) Levying taxes
d) Borrowing by government
✅ Answer: a) Buying and selling of government securities by RBI

4. Increase in CRR leads to:

a) Increase in inflation
b) Increase in money supply
c) Decrease in lending ability of banks
d) Increase in foreign exchange reserves
✅ Answer: c) Decrease in lending ability of banks

5. Which instrument is used by RBI to manage liquidity in the short-term?

a) Fiscal Deficit
b) Repo Rate
c) Bank Rate
d) Direct Taxes
✅ Answer: b) Repo Rate

6. Statutory Liquidity Ratio is maintained in:

a) Only gold
b) Only cash
c) Cash, gold or government securities
d) Foreign currency
✅ Answer: c) Cash, gold or government securities

7. Which of the following is not an objective of monetary policy?

a) Price stability
b) Employment generation
c) Maximizing tax collection
d) Exchange rate stability
✅ Answer: c) Maximizing tax collection

8. During deflation, RBI should adopt:

a) Tight monetary policy
b) Neutral monetary policy
c) Contractionary monetary policy
d) Expansionary monetary policy
✅ Answer: d) Expansionary monetary policy

9. Which is a qualitative credit control measure?

a) Open Market Operations
b) CRR
c) Moral Suasion
d) SLR
✅ Answer: c) Moral Suasion

10. The rate at which RBI lends money to commercial banks is called:
a) Reverse Repo Rate
b) Base Rate
c) Repo Rate
 d) Call Rate
✅ Answer: c) Repo Rate

11. An increase in the Bank Rate results in:

a) Increase in bank lending
b) Decrease in interest rates
c) Costlier loans
d) Increase in consumer spending
✅ Answer: c) Costlier loans

12. Reverse Repo Rate is used by RBI to:

a) Inject liquidity
b) Absorb liquidity
c) Decrease foreign investment
d) Fix inflation target
✅ Answer: b) Absorb liquidity

13. Which of the following affects the cost of borrowing for banks?
a) CRR
b) SLR
c) Repo Rate
d) Margin Requirement
✅ Answer: c) Repo Rate

14. Which of the following is not a tool of monetary policy?

a) Government expenditure
b) CRR
c) Bank Rate
d) SLR
✅ Answer: a) Government expenditure

15. Which institution implements monetary policy in India?

a) Finance Commission
b) Reserve Bank of India
c) SEBI
d) Ministry of Finance
✅ Answer: b) Reserve Bank of India

16. The current inflation target set by RBI is:

a) 2% ± 1%
b) 3% ± 1%
c) 4% ± 2%
d) 5% ± 2%
✅ Answer: c) 4% ± 2%

17. Which policy aims to reduce money supply in the economy?

a) Expansionary policy
b) Tight monetary policy
c) Liberal trade policy
d) None of the above
✅ Answer: b) Tight monetary policy
18. Which instrument helps RBI regulate short-term liquidity?
a) Direct taxes
b) Public borrowing
c) LAF (Liquidity Adjustment Facility)
d) Deficit financing
✅ Answer: c) LAF (Liquidity Adjustment Facility)

19. If the RBI wants to reduce inflation, it will:

a) Reduce CRR
b) Buy securities from the market
c) Increase Repo Rate
d) Lower SLR
✅ Answer: c) Increase Repo Rate

20. Which is a discretionary monetary policy tool?

a) CRR
b) SLR
c) Open Market Operations
d) Moral Suasion
✅ Answer: d) Moral Suasion

21. Tight monetary policy is usually adopted during:

a) Low inflation
b) Recession
c) Economic boom
d) Depression
✅ Answer: c) Economic boom

22. Which measure is taken by RBI to discourage speculation in sensitive commodities?

a) Repo rate hike
b) Moral suasion
c) Increase in CRR
d) Decrease in SLR
✅ Answer: b) Moral suasion

23. Which among the following is not a conventional instrument of monetary policy?
a) CRR
b) Repo rate
c) Reverse repo rate
d) Margin requirements
✅ Answer: d) Margin requirements

24. The main goal of inflation targeting is to:

a) Boost exports
b) Reduce fiscal deficit
c) Ensure price stability
d) Increase employment
✅ Answer: c) Ensure price stability

25. The effectiveness of monetary policy depends on:

a) Elasticity of credit demand
 b) Development of money market
c) Speed of transmission mechanism
d) All of the above
✅ Answer: d) All of the above

26. Which rate is part of the LAF corridor?

a) Bank Rate
b) CRR
c) Reverse Repo Rate
d) Inflation rate
✅ Answer: c) Reverse Repo Rate

27. Which of the following is not controlled by RBI under monetary policy?
a) Lending rate
b) Money supply
c) Government spending
d) Interest rates
✅ Answer: c) Government spending

28. Who heads the Monetary Policy Committee (MPC)?

a) Finance Minister
b) Prime Minister
c) RBI Governor
d) Chief Economic Advisor
✅ Answer: c) RBI Governor

29. Which of these may lead to a fall in inflation?

a) Decrease in CRR
b) Increase in Reverse Repo Rate
c) Reduction in Bank Rate
d) Increase in government spending
✅ Answer: b) Increase in Reverse Repo Rate

30. Which tool does the RBI use to advise banks without legally compelling them?
a) CRR
b) Bank Rate
c) Moral Suasion
d) SLR
✅ Answer: c) Moral Suasion