Question

Concerning the functions of the Central Bank of India, which statement(s) is (are) accurate?

1. The Central Bank controls the issuance of currency and manages the country’s monetary policy.
2. The Central Bank primarily focuses on maximizing its own profits.
3. The Central Bank advises the government to impose restrictions on import and encourages export.
4. The Central Bank’s decisions have no impact on the country’s economic stability.

Options

• 1. & 3.

• 2. & 4.

• Only 1.

• 3. & 4.

Answer 1

Only 1.

Explanation:

The primary macroeconomic function of a central bank (such as the Reserve Bank of India) is to maintain the monopoly on currency issuance and to formulate monetary policy to control inflation and economic growth. The other statements are completely false because a central bank is an apex regulatory body guided by public interest and economic stability rather than profit maximization, import/export tariffs are handled directly by the government’s fiscal ministry, and central banking decisions have a direct impact on a country’s financial stability.