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Question No. 361Interactive Test Mode
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Q361. An increase in the Bank Rate generally indicates that the:

An increase in the Bank Rate generally indicates that the:

Select the correct option below (or cross out options to eliminate)

Official Answer Key & Detailed Solution

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Click any option above to test yourself under exam conditions, or reveal the explanation directly.

Official UPSC Answer KeyUPSC Prelims 2013 • Indian Economy

Correct Answer: Option (D) — Central Bank is following a tight money policy

Concept & Option Breakdown

Standard Reference Verified

Bank Rate is the standard benchmark rate at which the central bank is prepared to buy or rediscount bills of exchange or lend to commercial banks. Raising the Bank Rate signals an increase in the cost of funds and credit contraction, which is the hallmark of a contractionary or 'tight money policy' aimed at curbing inflation.

Elimination Heuristic & Exam Approach

Hike in policy/bank rates = Tight/Dear Money Policy (designed to suck out liquidity). Lowering rates = Easy/Cheap Money Policy.

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Question Specifications & Syllabus Mapping

Examination & YearUPSC Civil Services Preliminary Examination 2013 (Q361)
Paper & Marking SchemeGS Paper I • 2 Marks (-0.66 Negative for incorrect response)
Syllabus Subject & TopicIndian Economy → Industry & Infrastructure
Official Answer KeyOption (D) — Central Bank is following a tight money policy

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Frequently Asked Questions — UPSC Prelims 2013 Q361

What is the official answer for UPSC Prelims 2013 GS Paper I Question 361 (Indian Economy)?

The official UPSC answer key for this 2013 Indian Economy (Industry & Infrastructure) question is Option (D): "Central Bank is following a tight money policy". Correct attempts carry 2 Marks with -0.66 Negative penalty for wrong answers.

Which UPSC Prelims syllabus topic does this 2013 question belong to?

This question belongs to GS Paper I under the subject "Indian Economy" and micro-topic "Industry & Infrastructure". You can explore all repeated questions from Industry & Infrastructure in Acme AI's 3D Prelims PYQ Realm or practice 50 full-length and sectional tests in the APT Prelims Test Series.

How can I solve this Industry & Infrastructure UPSC Prelims question using option elimination?

Hike in policy/bank rates = Tight/Dear Money Policy (designed to suck out liquidity). Lowering rates = Easy/Cheap Money Policy.

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