Question

The main objective of the monetary functions of RBI is to:

• A. Earn profit
• B. Control inflation and deflation
• C. Increase government revenue
• D. Provide employment

Answer 1

Answer:

B. Control inflation and deflation

RBI uses tools like repo rate, reverse repo rate, cash reserve ratio (CRR), and open market operations to regulate money supply and credit. The goal is to maintain price stability, promote economic growth, and prevent the economy from overheating (inflation) or slowing down excessively (deflation).