RRB NTPC Economics — practice by topic

Answer: D. The RESERVE BANK OF INDIA is responsible for maintaining price stability by controlling inflation. The PRIMARY OBJECTIVE of RBI's monetary policy, as enshrined in the RBI Act 1934 (Section 45ZA, amended in 2016), is to MAINTAIN PRICE STABILITY while keeping in mind the objective of growth. The RBI Act sets a flexible inflation target of 4% (with a tolerance band of plus or minus 2%, i.e., 2-6%) measured by CPI inflation, jointly agreed with the Central Government every five years. The MONETARY POLICY COMMITTEE (MPC), constituted under the RBI Act, sets the policy repo rate to achieve this inflation target. MPC has 6 members (3 from RBI including the Governor, 3 external members nominated by the Government). Distractors: (A) Department of Consumer Affairs handles consumer protection laws. (B) Expenditure Management Commission (Bimal Jalan, 2014) made recommendations on expenditure but has no inflation-fighting role. (C) Financial Stability and Development Council (FSDC) coordinates regulators on financial stability, not inflation. Source: RBI Act 1934 (as amended 2016) / Monetary Policy Framework Agreement 2015.

Answer: C. The money multiplier increases with an INCREASE IN THE BANKING HABIT OF THE PEOPLE. THE MONEY MULTIPLIER (m) is the ratio of broad money supply (M3) to the monetary base (M0): m = M3/M0. It indicates how much commercial bank credit expansion can be sustained per unit of high-powered money. Standard money multiplier formula: m = (1 + c) / (c + r), where c = currency-to-deposit ratio and r = reserve-to-deposit ratio (CRR + SLR + excess reserves). For the multiplier to INCREASE, EITHER c (currency ratio) OR r (reserve ratio) must DECREASE. (C) CORRECT. AN INCREASE IN BANKING HABIT means more of the population's money is held in BANK DEPOSITS rather than as cash in hand. This REDUCES THE CURRENCY-DEPOSIT RATIO (c), which INCREASES the money multiplier. More money in the banking system means banks can lend more and create more deposit money through fractional reserve banking. This is the textbook answer. Why other options are WRONG: (A) Higher CRR — REQUIRES BANKS to hold more reserves with the RBI, REDUCING lendable funds, REDUCING the multiplier. Opposite direction. (B) Higher SLR — REQUIRES BANKS to hold more in liquid assets (government securities), REDUCING credit creation capacity, REDUCING the multiplier. Opposite direction. (D) Larger population — has no direct mechanical effect on the multiplier. Population growth might affect demand for money but does not by itself raise the multiplier. Source: syllabus Macroeconomics Chapter 'Money and Banking'.

Answer: A. The COMMON GOAL of Gandhism and Marxism is a STATELESS SOCIETY. GANDHISM and MARXISM share remarkably little at the level of method (one rejects violence absolutely, the other accepts revolutionary violence. one is rooted in spirituality and dharma, the other in dialectical materialism). **But on ONE ULTIMATE GOAL they converge:** the eventual WITHERING AWAY OF THE STATE. MARX held that the state is an instrument of class oppression. In a fully developed communist society, classes disappear, the state has no function and 'withers away' (Engels in Anti-Duhring; Lenin in State and Revolution). The interim 'dictatorship of the proletariat' is transitional. GANDHI envisaged 'RAMRAJYA' or an ideal society based on enlightened anarchy, where each individual is self-governing through self-discipline and moral force. In his ideal village republic (gram swaraj), centralised state coercion is unnecessary because community life is regulated through truth (satya), non-violence (ahimsa) and trusteeship. Gandhi famously remarked that 'the state represents violence in a concentrated and organised form' and the ideal was to do away with it. So both look to a future stateless ethical community as the final destination, though they differ totally on how to get there. Why other options are WRONG: (B) Class struggle is the engine of Marxism but is REJECTED by Gandhi, who emphasised class harmony through trusteeship (the wealthy hold their wealth in trust for society) and conflict-resolution through satyagraha, not class warfare. (C) Abolition of private property is a Marxist objective. Gandhi did NOT advocate abolition of private property instead he proposed TRUSTEESHIP, where property remains in private hands but the holder acts as a trustee for the community. (D) Economic determinism (history driven by economic base) is a core Marxist thesis. Gandhi rejected this, holding that history is shaped by moral, spiritual and ethical forces (truth, non-violence), not solely by economic conditions. Source: syllabus Political Science 'Political Theory' M.K. Gandhi 'Hind Swaraj' and 'India of My Dreams' F. Engels 'Anti-Duhring'.