UPSC Prelims Practice Questions — Prudent approach

Q1. The power to determine the policy rate required to achieve the inflation target — exercised by the Monetary Policy Committee when it announced its August 2026 resolution — is conferred by which one of the following provisions of the Reserve Bank of India Act, 1934?

  • A. Section 45ZA, which deals with the inflation target
  • B. Section 45ZB, which deals with the Monetary Policy Committee
  • C. Section 45Z-I, which deals with meetings of the Committee
  • D. Section 45ZN, which deals with failure to maintain the target

Q2. Retail inflation of 4.38 per cent in June 2026 was, on a comparison with the back-series data, the highest reading in how many months?

  • A. Twelve months
  • B. Fifteen months
  • C. Eighteen months
  • D. Twenty-four months

Q3. In the context of the Monetary Policy Committee constituted under the Reserve Bank of India Act, 1934, the 'casting vote' of the Governor means which one of the following?

  • A. A second vote that the Governor may exercise only when the votes of the members are equally divided
  • B. A vote by which the Governor may override a majority decision of the Committee on grounds of financial stability
  • C. A vote that the Governor may record on behalf of any member who is absent from a meeting of the Committee
  • D. A vote by which the Governor may defer a resolution of the Committee to its next scheduled meeting

Q4. As of its August 2026 resolution, for how many consecutive meetings had the Monetary Policy Committee left the policy repo rate unchanged at 5.25 per cent?

  • A. Two consecutive meetings
  • B. Three consecutive meetings
  • C. Four consecutive meetings
  • D. Six consecutive meetings

Q5. Under the special dollar-rupee swap facility for fresh FCNR(B) deposits operationalised in June 2026, which one of the following may enter into the swap transaction with the Reserve Bank of India?

  • A. Authorised Dealer banks that mobilise the eligible deposits
  • B. Primary Dealers accredited by the Reserve Bank for government securities
  • C. Overseas branches and exchange houses that source non-resident remittances
  • D. All-India financial institutions such as NABARD, SIDBI and EXIM Bank

Q6. The width of the liquidity adjustment facility corridor, that is, the gap between its ceiling and its floor, is presently how many basis points?

  • A. Twenty-five basis points
  • B. Fifty basis points
  • C. Sixty-five basis points
  • D. One hundred basis points