Which of the following institution is responsible for controlling the money supply in India?
Show answer & explanation
Correct answer: B
Explanation
Correct Answer:
Option 2: Reserve Bank of India
Explanation:
The Reserve Bank of India (RBI) is India's central bank, and it controls the money supply within the country. It was established in 1935. The RBI regulates inflation through monetary policy and maintains economic stability. It holds the sole authority to issue currency notes. Its key instruments include the Repo Rate, Reverse Repo Rate, Cash Reserve Ratio (CRR), and Bank Rate. The RBI also supervises the banking system.
Additional Facts:
Option 1: NABARD is related to rural development.
Option 3: NITI Aayog formulates plans.
Option 4: The CAG conducts audits.
Potential Questions for Upcoming Exams:
Question: When was the RBI established?
Answer: 1935
Question: Where is the RBI's headquarters located?
Answer: Mumbai
Question: What is the Repo Rate?
Answer: The rate at which the RBI lends to banks.
Question: What is CRR?
Answer: Cash Reserve Ratio