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BBA 1st Year Business Environment FEMA Long Question Answer

BBA 1st Year Business Environment FEMA Long Question Answer : BBA 1st 2 and 3 Year Important Question Paper With Answer Notes in This Post Free Online Study Material 2019 Available.

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BBA 1st Year Important Long Question Answer | Page 3

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BBA 1st Year Business Environment FEMA Long Question Answer

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BBA 1st 2nd 3rd Year Study Material Notes

Section-C (Long Answer Questions)

Q. 1. What is monetary policy? What are its weaknesses and strengths?

Or Discuss the meaning and scope of monetary policy. Also explain the limitations of monetary policy along with instruments of monetary policy.

Ans. Monetary policy refers to the case of techniques of monetary control at the disposal of the Central Bank of the country. A development oriented economy like India, needs a sound monetary policy, which is not only helpful in the economic development of a country, but it also able to bring out stability in the country.

(I) “Monetary policy is a policy employing Central Bank’s control of the supply of money as an instruments of achieving the objectives of general economic policy.” —Harry Johnson

(ii) “Monetary policy is a conscious action undertaken by the monetary authorities to change the
quantity, availability, cost of money.” —Shaw

(iii) “Monetary policy is the attitude of the political authority towards the monetary system of
the community under its control”. —Paul Einzig

Generally it is said that, monetary policy is a programme undertaken by the monetary authorities generally the Central Bank, to control and regulate the supply of money with the public and the flow of credit with a view to achieve predetermined macro economic goals.

The objectives of monetary policy are growth, employment, stability of price and foreign change and balance of payment equilibrium. Monetary policy is the use of instruments under the control of RRI to influence the demand of goods and services of the trends in certain sectors of the economy. It is said to be operating through varying cost and availability of credit, helps to show changes in the pattern of assets of credit institutions, specially banks.

Nature of Monetary Policy

Reserve bank of India with the help of monetary policy targets a key set of indicators to ensure that there exists price stability in the country’s economy. The factors induced are as follows:

(i) Money supply, commonly referred as M3.

(ii) Interest rate.

(iii) Inflation.

Monetary policy gives a platform or a base to announce the rules and regulations or norm for RBl governed bodies as banks, Fils, non-banking finance companies, residual non-banking companies nidhis, primary dealers in money markets and authorjsed dealers in foreign exchange markets. Monetary policy is said to be announced twice a year:

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