MULTIPLE CHOICE QUESTIONS (MCQS) ON THE TOPIC CONTROL OF INFLATION IN INDIA: MONETARY, FISCAL, AND DIRECT MEASURES ALONG WITH THEIR ANSWERS:

Which of the following is a direct measure to control inflation?
A) Increasing indirect taxes
B) Lowering the reverse repo rate
C) Setting maximum prices for essential goods
D) Conducting open market operations
Answer: C) Setting maximum prices for essential goods
A common fiscal measure to control inflation is:
A) Increasing public sector wages
B) Raising excise duties
C) Lowering the repo rate
D) Reducing the CRR
Answer: B) Raising excise duties
The RBI’s monetary policy to control inflation involves:
A) Increasing government revenue
B) Regulating money supply and credit
C) Reducing the fiscal deficit
D) Imposing tariffs on imports
Answer: B) Regulating money supply and credit
Direct measures to combat inflation include:
A) Reducing public expenditure
B) Increasing the SLR
C) Implementing price ceilings
D) Modifying tax rates
Answer: C) Implementing price ceilings
The primary goal of fiscal policy in controlling inflation is:
A) Increasing money supply
B) Stabilizing prices through government spending and taxation
C) Reducing bank interest rates
D) Enhancing foreign investment
Answer: B) Stabilizing prices through government spending and taxation
Which of the following is a monetary measure to control inflation?
A) Lowering direct taxes
B) Increasing the CRR
C) Raising public sector wages
D) Reducing government expenditure
Answer: B) Increasing the CRR
Fiscal policy to control inflation may involve:
A) Lowering the base rate
B) Reducing government subsidies
C) Decreasing the CRR
D) Conducting OMOs
Answer: B) Reducing government subsidies
Direct measures to control inflation in India include:
A) Modifying interest rates
B) Open market operations
C) Price and wage controls
D) Lowering indirect taxes
Answer: C) Price and wage controls
Which of the following actions would decrease inflation?
A) Decreasing the SLR
B) Lowering the repo rate
C) Increasing the CRR
D) Reducing government spending
Answer: D) Reducing government spending
What is the impact of raising the repo rate?
A) Increases bank lending
B) Reduces money supply
C) Enhances consumer demand
D) Raises public sector wages
Answer: B) Reduces money supply
One way the government can reduce inflation is by:
A) Increasing public sector salaries
B) Reducing public expenditure
C) Lowering indirect taxes
D) Reducing the SLR
Answer: B) Reducing public expenditure
A key objective of monetary policy in controlling inflation is:
A) Reducing public debt
B) Increasing government spending
C) Controlling money supply
D) Decreasing imports
Answer: C) Controlling money supply
Fiscal policy to control inflation may involve:
A) Lowering the repo rate
B) Reducing the fiscal deficit
C) Increasing the CRR
D) Decreasing the SLR
Answer: B) Reducing the fiscal deficit
Direct measures to control inflation in India include:
A) Open market operations
B) Increasing the cash reserve ratio
C) Setting price ceilings
D) Modifying tax policies
Answer: C) Setting price ceilings
Which is a primary goal of the RBI’s monetary policy?
A) Increasing public spending
B) Maintaining price stability
C) Reducing the budget deficit
D) Imposing tariffs on imports
Answer: B) Maintaining price stability
Fiscal policy can help control inflation by:
A) Increasing the repo rate
B) Lowering the SLR
C) Reducing government borrowing
D) Conducting open market operations
Answer: C) Reducing government borrowing
Increasing the CRR is a measure taken by the RBI to:
A) Increase consumer spending
B) Decrease money supply
C) Lower interest rates
D) Raise government revenue
Answer: B) Decrease money supply

Direct control of prices is an example of:
A) Monetary policy
B) Fiscal policy
C) Direct measures
D) Supply-side policy
Answer: C) Direct measures
Which fiscal measure can reduce inflation?
A) Decreasing income tax rates
B) Increasing public expenditure
C) Raising excise duties
D) Lowering import tariffs
Answer: C) Raising excise duties
What is the impact of raising the reverse repo rate?
A) Increases bank lending
B) Reduces money supply
C) Enhances consumer demand
D) Raises public sector wages
Answer: B) Reduces money supply
One of the methods to control inflation is:
A) Increasing direct taxes
B) Decreasing the CRR
C) Increasing government subsidies
D) Reducing the repo rate
Answer: A) Increasing direct taxes
The government might control inflation by:
A) Decreasing public sector jobs
B) Increasing subsidies
C) Reducing direct taxes
D) Lowering the SLR
Answer: A) Decreasing public sector jobs
Which of the following is a direct measure to control inflation?
A) Raising the repo rate
B) Increasing the fiscal deficit
C) Reducing direct taxes
D) Imposing price controls
Answer: D) Imposing price controls
Reducing the fiscal deficit helps control inflation by:
A) Increasing public debt
B) Reducing money supply
C) Enhancing consumer spending
D) Lowering interest rates
Answer: B) Reducing money supply
Which of these is not a monetary measure to control inflation?
A) Open market operations
B) Increasing the repo rate
C) Imposing price controls
D) Raising the CRR
Answer: C) Imposing price controls
A fiscal tool to control inflation is:
A) Decreasing the SLR
B) Reducing public expenditure
C) Increasing the repo rate
D) Conducting OMOs
Answer: B) Reducing public expenditure
To control inflation, the RBI may:
A) Decrease the reverse repo rate
B) Lower the CRR
C) Conduct open market sales
D) Increase public spending
Answer: C) Conduct open market sales
Direct measures to control inflation in India include:
A) Open market operations
B) Imposing import duties
C) Increasing the repo rate
D) Setting wage controls
Answer: D) Setting wage controls
What happens when the RBI increases the CRR?
A) Bank lending increases
B) Money supply decreases
C) Interest rates decrease
D) Inflation rises
Answer: B) Money supply decreases
Fiscal policy aims to control inflation by:
A) Modifying interest rates
B) Adjusting government spending and taxation
C) Changing the CRR
D) Setting price controls
Answer: B) Adjusting government spending and taxation
Which of the following is a direct measure to control inflation?
A) Increasing indirect taxes
B) Lowering the reverse repo rate
C) Setting maximum prices for essential goods
D) Conducting open market operations
Answer: C) Setting maximum prices for essential goods
A common fiscal measure to control inflation is:
A) Increasing public sector wages
B) Raising excise duties
C) Lowering the repo rate
D) Reducing the CRR
Answer: B) Raising excise duties
The RBI’s monetary policy to control inflation involves:
A) Increasing government revenue
B) Regulating money supply and credit
C) Reducing the fiscal deficit
D) Imposing tariffs on imports
Answer: B) Regulating money supply and credit
Direct measures to combat inflation include:
A) Reducing public expenditure
B) Increasing the SLR
C) Implementing price ceilings
D) Modifying tax rates
Answer: C) Implementing price ceilings
The primary goal of fiscal policy in controlling inflation is:
A) Increasing money supply
B) Stabilizing prices through government spending and taxation
C) Reducing bank interest rates
D) Enhancing foreign investment
Answer: B) Stabilizing prices through government spending and taxation
Which of the following is a monetary measure to control inflation?
A) Lowering direct taxes
B) Increasing the CRR
C) Raising public sector wages
D) Reducing government expenditure
Answer: B) Increasing the CRR
Fiscal policy to control inflation may involve:
A) Lowering the base rate
B) Reducing government subsidies
C) Decreasing the CRR
D) Conducting OMOs
Answer: B) Reducing government subsidies
Direct measures to control inflation in India include:
A) Modifying interest rates
B) Open market operations
C) Price and wage controls
D) Lowering indirect taxes
Answer: C) Price and wage controls
Which of the following actions would decrease inflation?
A) Decreasing the SLR
B) Lowering the repo rate
C) Increasing the CRR
D) Reducing government spending
Answer: D) Reducing government spending
What is the impact of raising the repo rate?
A) Increases bank lending
B) Reduces money supply
C) Enhances consumer demand
D) Raises public sector wages
Answer: B) Reduces money supply
One way the government can reduce inflation is by:
A) Increasing public sector salaries
B) Reducing public expenditure
C) Lowering indirect taxes
D) Reducing the SLR
Answer: B) Reducing public expenditure
A key objective of monetary policy in controlling inflation is:
A) Reducing public debt
B) Increasing government spending
C) Controlling money supply
D) Decreasing imports
Answer: C) Controlling money supply
Fiscal policy to control inflation may involve:
A) Lowering the repo rate
B) Reducing the fiscal deficit
C) Increasing the CRR
D) Decreasing the SLR
Answer: B) Reducing the fiscal deficit
Direct measures to control inflation in India include:
A) Open market operations
B) Increasing the cash reserve ratio
C) Setting price ceilings
D) Modifying tax policies
Answer: C) Setting price ceilings
Which is a primary goal of the RBI’s monetary policy?
A) Increasing public spending
B) Maintaining price stability
C) Reducing the budget deficit
D) Imposing tariffs on imports
Answer: B) Maintaining price stability
Fiscal policy can help control inflation by:
A) Increasing the repo rate
B) Lowering the SLR
C) Reducing government borrowing
D) Conducting open market operations
Answer: C) Reducing government borrowing
Increasing the CRR is a measure taken by the RBI to:
A) Increase consumer spending
B) Decrease money supply
C) Lower interest rates
D) Raise government revenue
Answer: B) Decrease money supply
Direct control of prices is an example of:
A) Monetary policy
B) Fiscal policy
C) Direct measures
D) Supply-side policy
Answer: C) Direct measures
Which fiscal measure can reduce inflation?
A) Decreasing income tax rates
B) Increasing public expenditure
C) Raising excise duties
D) Lowering import tariffs
Answer: C) Raising excise duties
What is the impact of raising the reverse repo rate?
A) Increases bank lending
B) Reduces money supply
C) Enhances consumer demand
D) Raises public sector wages
Answer: B) Reduces money supply