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Q.

Which of the following is a tool used by the Reserve Bank of India (RBI) to regulate money supply in the economy?

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a

Fiscal policy

b

Monetary policy

c

Industrial policy

d

Foreign trade policy

answer is B.

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Detailed Solution

Monetary policy is a tool used by the Reserve Bank of India (RBI) to regulate the money supply in the economy. It involves controlling the supply of money and credit through various measures such as changing the interest rates, reserve requirements, and open market operations. Fiscal policy involves changes in government spending and taxation to influence the economy. Industrial policy and foreign trade policy are related to the development of industries and foreign trade respectively and are not directly related to the regulation of money supply.

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