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?
- A. 1 only
- B. 2, 3 and 4
- C. 1 and 2
- D. 1, 3 and 4
Answer: C
Explanation
Over the last two decades, central banks have veered round to conducting monetary policy through a single short-term interest rate as a policy rate that it controls through open market operations (OMOs). These OMOs are conducted under an operating framework that typically includes liquidity infusion/absorption through repurchase agreements (repos) or outright transactions in eligible securities between the central bank and the market participants. Public Revenue and debt are not part of monetary policy. These are related to fiscal policy.