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CUET Economics 2025 PYQs2 June Shift 1. Free, no login required.

Macro

past year questions, CUET Economics 2025 2 June Shift 1

Money & Banking

past year questions, Macro, CUET Economics 2025 2 June Shift 1

Easy

Comprehension:

Read the passage carefully and answer the questions based on the passage:

RBI Monetary Policy

The Reserve Bank of India, in its monetary policy meet decided to keep the key policy rates unchanged after two emergency rate cuts amid the COVID-19 disruptions and its ensuing economic fall out. Consequently, the repo rate stands unchanged at 4% and the reverse repo rate at 3.35%. RBI noted that the economic activity had started to recover from the lows of April-May. Meanwhile, migrant labor is returning to work in urban areas, and factories and construction activities are coming back to life. This is also reflected in rising levels of energy consumption and population mobility. In cities, traffic intensity is rising rapidly; online commerce is booming; and people are getting back to offices. The mood of the nation has shifted from fear and despair to confidence and hope. Some of this optimism is being reflected in people’s expectations. In September 2020, round of the RBI’s survey, households expects inflation to decline modestly over the next three months, indicative of hope that supply chains are mending.

Why did Monetary Policy Committee keep its policy rate unchanged in its recent meet?

Solution

✅ Correct Option: 1

Option 1 -> When economic activities are recovering, maintaining policy rates supports continued growth momentum.

Option 2 -> Avoiding deflation typically requires rate cuts, not maintaining unchanged rates.

Option 3 -> Monetary policy decisions are based on economic data and analysis, not irrational choices.

Option 4 -> Keeping rates unchanged doesn't reduce economic activities; rate hikes would be needed for that.

Hence, Option 1: Due to recovery of economic activities -> When an economy shows signs of recovery, central banks often maintain policy rates unchanged to provide stability and support the growth momentum. Changing rates during recovery could disrupt the positive trajectory. The MPC likely assessed that economic activities were improving sufficiently to warrant maintaining the current stance, allowing the recovery to consolidate before considering any policy adjustments. This approach balances supporting growth while remaining vigilant about inflation and other economic indicators. -> correct

More from this set:

Question 41

The Reserve Bank of India (RBI) __________ government securities in a bid to ________ the stock of money in the economy.

Question 42

A cut in Repo Rate would lead to __________ in Money Supply and a cut in Reverse Repo Rate would lead to __________ in deposits of commercial bank to RBI

Question 44

Which of the following is not a monetary measure adopted by Reserve Bank of India?

Question 45

Repo Rate is the rate at which.

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