Indian Economy·Prelims Questions

Policy Coordination — Prelims Questions

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Version 1Updated 7 Mar 2026

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Q1medium

Which of the following statements correctly describes the primary objective of the Monetary Policy Committee (MPC) in India?

Q2medium

Consider the following statements regarding policy coordination in India: 1. The Fiscal Responsibility and Budget Management (FRBM) Act aims to institutionalize fiscal prudence, thereby facilitating effective monetary policy. 2. The Monetary Policy Committee (MPC) is solely responsible for setting the inflation target for the Indian economy. 3. Section 7 of the RBI Act, 1934, grants the Government the power to issue directions to the RBI Governor, but it is rarely invoked. Which of the statements given above is/are correct?

Q3hard

Which of the following is NOT a direct mechanism for policy coordination between the Government and the RBI in India?

Q4easy

The term 'fiscal dominance' in the context of policy coordination refers to a situation where:

Q5medium

Which of the following reforms significantly contributed to reducing 'fiscal dominance' in India post-1991? 1. Abolition of ad-hoc Treasury Bills. 2. Enactment of the Fiscal Responsibility and Budget Management (FRBM) Act. 3. Establishment of the Monetary Policy Committee (MPC). Select the correct answer using the code given below: