Fiscal & Monetary Policy

JKSSB Panchayat Account Assistant · General Economics · 16 practice questions with answers and explanations: 4 Easy, 7 Medium, 5 Hard.

Sample questions

Sample Easy question 1

What is 'monetary policy'?

  1. Central bank policy controlling money supply and interest rates
  2. Government policy regarding spending on public services only
  3. Government policy regarding the collection of taxes only
  4. Policy regarding foreign trade and the balance of payments
Show answer

Answer: A. Monetary policy is managed by a central bank to control the money supply and interest rates.

Sample Medium question 2

Open market operations by the RBI refer to:

  1. Regulating dealers in foreign exchange
  2. Changing the bank rate on loans to banks
  3. Opening new bank branches in rural areas
  4. Buying and selling government securities
Show answer

Answer: D. Selling securities absorbs money from the system; buying them injects liquidity.

Sample Hard question 3

What is the primary objective of fiscal policy during an economic recession?

  1. To reduce government spending drastically to cut the deficit
  2. To increase interest rates sharply to attract savings
  3. To stimulate demand through increased spending or tax cuts
  4. To reduce the money supply in the economy
Show answer

Answer: C. During a recession, expansionary fiscal policy aims to boost demand and economic activity.

More General Economics topics for JKSSB Panchayat Account Assistant

Related articles