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Practice Questions on Monetary Policy for UPSC, APPSC and other state PSC exams

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Practice Questions on Monetary Policy

Practice Questions on Monetary Policy

1. The sterilization operations by RBI refer to:

 
 
 
 

2. Credit Rationing by RBI refers to:

 
 
 
 

3. The term ‘Dovish’ monetary policy refers to:

 
 
 
 

4. An inverted yield curve is often considered a signal of:

 
 
 
 

5. In case of a tie in MPC voting the casting vote is exercised by:

 
 
 
 

6. Which committee recommended inflation targeting framework for India?

 
 
 
 

7. The concept of ‘Real Interest Rate’ is calculated as:

 
 
 
 

8. Open Market Operations (OMO) are conducted by RBI to:

 
 
 
 

9. The RBI absorbs excess liquidity from the banking system through:

 
 
 
 

10. The primary objective of monetary policy in India as per RBI Act 1934 (amended 2016) is:

 
 
 
 

11. The current Cash Reserve Ratio (CRR) is:

 
 
 
 

12. The Cash Reserve Ratio (CRR) is maintained by banks with:

 
 
 
 

13. The GDP growth projection by RBI for FY 2025-26 (as of February 2026 MPC) is:

 
 
 
 

14. The Marginal Standing Facility (MSF) rate is currently:

 
 
 
 

15. The quorum for a valid MPC meeting is:

 
 
 
 

16. The difference between CRR and SLR is:

 
 
 
 

17. Bank Rate is defined under which section of RBI Act 1934?

 
 
 
 

18. The width of the current LAF corridor (policy rate corridor) is:

 
 
 
 

19. Which of the following is a qualitative tool of monetary policy?

 
 
 
 

20. RBI’s forex reserves as of early 2026 are approximately:

 
 
 
 

21. The term ‘Accommodative Stance’ in monetary policy indicates:

 
 
 
 

22. Money Supply M1 includes:

 
 
 
 

23. The Standing Deposit Facility (SDF) rate is currently:

 
 
 
 

24. The Statutory Liquidity Ratio (SLR) is maintained by banks in the form of:

 
 
 
 

25. The composition of Monetary Policy Committee includes:

 
 
 
 

26. The RBI injects liquidity into the banking system through:

 
 
 
 

27. The current Repo Rate as per RBI MPC decision of February 2026 is:

 
 
 
 

28. The term ‘Basis Points’ (bps) means:

 
 
 
 

29. The Reserve Money (M0) is also called:

 
 
 
 

30. The Credit Multiplier in banking depends on:

 
 
 
 

31. Market Stabilization Scheme (MSS) was introduced in:

 
 
 
 

32. If CPI inflation remains above 6% for three consecutive quarters RBI must:

 
 
 
 

33. The Call Money Market is a market for:

 
 
 
 

34. The term ‘Yield Curve’ represents:

 
 
 
 

35. The Weighted Average Lending Rate (WALR) is used to measure:

 
 
 
 

36. MCLR (Marginal Cost of Funds based Lending Rate) was introduced in:

 
 
 
 

37. The term ‘Neutral Stance’ in monetary policy means:

 
 
 
 

38. The inflation targeting framework in India uses which measure of inflation?

 
 
 
 

39. Money Supply M3 includes:

 
 
 
 

40. The Weighted Average Call Rate (WACR) is:

 
 
 
 

41. The inflation target agreement between Government and RBI is valid for:

 
 
 
 

42. Monetary policy transmission refers to:

 
 
 
 

43. The term ‘Liquidity Trap’ refers to a situation where:

 
 
 
 

44. The term ‘Hawkish’ monetary policy refers to:

 
 
 
 

45. The Liquidity Adjustment Facility (LAF) was introduced by RBI in:

 
 
 
 

46. The term ‘Moral Suasion’ in monetary policy means:

 
 
 
 

47. The Urjit Patel Committee recommended an inflation target of:

 
 
 
 

48. The External Benchmark Lending Rate (EBLR) was introduced by RBI from:

 
 
 
 

49. Quantitative Easing (QE) is an unconventional monetary policy tool involving:

 
 
 
 

50. The CPI inflation projection by RBI for FY 2025-26 (as of February 2026 MPC) is:

 
 
 
 

51. The Monetary Policy Committee (MPC) was constituted under which section of RBI Act 1934?

 
 
 
 


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