Question

The Monetary Policy used to decrease the amount of money supply in the economy through measures is called

• A. Expansionary Monetary Policy
• B. Neutral Monetary Policy
• C. Contractionary Monetary Policy
• D. Inflationary Monetary Policy

Answer 1

Answer:

C. Contractionary Monetary Policy

Monetary Policy of RBI:

• It is a macroeconomic policy tool used by the Central Bank to influence the money supply in the economy, to achieve certain macroeconomic goals.
• It involves the use of monetary instruments by the central bank to regulate the availability of credit in the market, to achieve the ultimate objective of economic policy.

Types of Monetary Policy:

• Expansionary Monetary Policy
• Contractionary Monetary Policy.

Expansionary Monetary Policy:

• It is also called Accommodative Monetary Policy.
• Its primary purpose is to increase the money supply in the economy through measures.

Contractionary Monetary Policy:

It is used to decrease the amount of money supply in the economy through measures