WBCS.LIVE practice question

What is the primary and legally mandated objective of the 'Monetary Policy Committee' (MPC) in India?

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. Maximizing foreign direct investment
  2. Reducing the fiscal deficit
  3. Creating new rural employment
  4. Inflation targeting

Correct answer and explanation

Correct answer: Inflation targeting

Explanation: āœ… Correct Answer: D) Inflation targeting šŸ“š Explanation: The Monetary Policy Committee (MPC) is a specialized six-member body led by the Governor of the Reserve Bank of India. Its primary, legally mandated objective is flexible inflation targeting, which involves maintaining the consumer price inflation within a fixed healthy range (usually 4% with a margin of +/- 2%). The committee achieves this by systematically adjusting the benchmark policy interest rates.