The question (15 marks)
Describe the features and instruments of the Indian money market, and explain the measures of money supply. How does monetary policy actually take effect through these? (15 marks)
Standing MU question on Module 3 heads 1 and 3. Built from chapters 14 and 16 and worked example 13.
Plan your answer on paper before you look at the authorities — issue first, then the rule, then apply it to these facts.
It tests Unit 3 · Financial Markets and Fiscal System of Economics.
Authorities you will need
- Reserve Bank of India material on money market instruments, policy rates and reserve ratios
- Reserve Bank of India Act
- Reserve Bank of India material on monetary aggregates and the Working Group recommendations
How an answer is marked
A full-marks answer names the issue in one line, states the rule with its section, cites the authority, applies it to these facts and concludes — in that order. The app's model answer for this question is written in exactly that shape, with a checklist to mark your own attempt against.