The Monetary Policy Committee maintained a hawkish stand on the interest rates. In this context, 'hawkish' stand means __________.
- A.interest rates were decreased
- B.interest rates were increased
- C.interest rates were kept unchanged
- D.money supply was increased
Correct answer
Explanation
The correct answer is B, interest rates were increased. A hawkish stand means the central bank is more worried about inflation than about slow growth, so it leans towards raising the policy rate and tightening money. Costlier loans cool down borrowing and spending, and prices rise more slowly. In India the Monetary Policy Committee, set up in 2016 under the amended RBI Act, has six members - three from the RBI and three named by the Centre - and it decides the repo rate by majority, with the Governor holding a casting vote. It has to keep retail inflation at 4 per cent, within a band of 2 to 6 per cent. Option A is wrong because cutting rates to support growth is the opposite, a dovish stand. Option C is wrong because leaving rates untouched is a neutral or wait-and-watch stance. Option D is wrong because increasing money supply is expansionary and again dovish. Exam tip: hawk fights inflation and raises rates, dove protects growth and cuts them.
Practice Questions
View allAccording to the law of diminishing marginal utility, as the amount of a good consumed increases, the marginal utility of that good tends to
- A.improve
- B.diminish
- C.remain constant
- D.first diminish and then improve
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Each extra unit of a good gives a consumer less additional satisfaction than the unit before it, so marginal utility falls as consumption rises.
Read the full explanation →Consider the following statements about impact of tax : 1. A tax is shifted forward to consumers if the demand is inelastic relative to supply. 2. A tax is shifted backward to producers if the supply is relatively more inelastic than demand. Which of the statements given above is/are correct?
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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The burden of a tax falls more heavily on whichever side of the market is less elastic, the side that cannot easily walk away.
Read the full explanation →UBI, as an alternative for subsidies in poverty alleviation, stands for
- A.Union Basic Income
- B.Undefined Basic Income
- C.Unconditional Basic Income
- D.Universal Basic Income
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UBI is the idea of paying every citizen a fixed sum of money regularly, without conditions, in place of a large number of separate subsidies and welfare schemes.
Read the full explanation →Who among the following is the Chairman of the Fourteenth Finance Commission?
- A.C. Rangarajan
- B.Vijay Kelkar
- C.Y. V. Reddy
- D.Rakesh Mohan
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The Fourteenth Finance Commission, set up in 2013 for the award period 2015-2020, was chaired by Y. V. Reddy, a former Governor of the Reserve Bank of India.
Read the full explanation →Why was constitutional amendment needed for introducing GST?
- A.States were not willing to agree with the Union for introduction of GST without amendment in the Constitution.
- B.GST was to be implemented on concurrent base and Article 246 was inadequate for such a case.
- C.The Empowered Committee of Finance Ministers had recommended for constitutional amendment.
- D.The GST Council had recommended for constitutional amendment so that its power enhances.
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GST is levied by the Union and the States together on the same supply, and Article 246, which splits taxing powers between them through separate lists, did not allow such a concurrent tax.
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