Question : The money supply is governed by the:
Option 1: Planning Commission
Option 2: Finance Commission
Option 3: Reserve Bank of India
Option 4: Commercial banks
Correct Answer: Reserve Bank of India
Solution : The correct option is the Reserve Bank of India .
The RBI is the central banking organisation in charge of governing and managing the nation's credit and money supply. To preserve price stability and ensure sufficient credit flow to sustain economic growth, it develops and implements monetary policy. Open market operations, reserve requirements, and the policy repo rate are just a few of the techniques and instruments the RBI utilises to control the amount of money in the economy. These instruments are employed to control interest rates, inflation, and overall economic stability.
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