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Economy > Monetary Policy > Flashcards

Monetary Policy Flashcards

1
Q

What are parts of MP?

A

Interest Rate determination
Regulate Money Supply
Control Inflation

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2
Q

Objectives of MP

A

Price Stability
Exchange rate stability
Financial Stability
Growth, Investment, Savings, Employment

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3
Q

What is credit Policy

A

how much and at what rate money should be lent

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4
Q

Types of Monetary Policy

A

Expansionary

Contractionary

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5
Q

What is contractionary MP

A

Dear Money, reduce Money supply

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6
Q

What is Expansionary MP

A

Cheap Money and increases Money Supply

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7
Q

Earlier system of MP?

A

Announced twice.
One Slack Season - Apr - Sept
One Busy Season - Oct - Mar

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8
Q

Recommendations of Urjit Patel Committee?

A

Inflation targeting +-2
MPC
MP atleast 4 times a year

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9
Q

What is Liquidation Adjustment Facility

A

Intro by RBI in 2000
Adjust liquidity and Money supply in market
By using G-Sec as collateral
Its instruments are - Repo rate and Reverse repo rate

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10
Q

What are the instruments of LAF

A

Repo rate and Reverse Repo rate

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11
Q

What is Repo Rate

A

Banks meet daily shortage by borrowing from RBI.

They borrow at Repo rate

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12
Q

What is Reverse Repo Rate

A

RBI absorb excess liquidity by borrowing from banks at RRR

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13
Q

Relation between RR and RRR

A

RRR is 25% or 25bp less than RR

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14
Q

Are RRB, Commercial banks, Primary dealers eligible for LAF?

A

Commercial banks - Yes
RRB - No
Primary Dealers - Yes

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15
Q

Payments Banks established and licensed under?

A

Established - Companies Act

License - BRA

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16
Q

Who are primary dealers

A

Financial firms that help RBI in buying and selling of G-Secs

17
Q

Ready Forward Contract Repos

A

Banks borrow from RBI at Repo rate.

They agree to sell and repurchase the security at a future date at agreed price

18
Q

LAF that is repo rate and RRR dealt using

A

Only RBI approved - T Bill, SG CG bonds

Economy (8 decks)

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