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CAT 2000 | Question: 118

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Although in the limited sense of freedom regarding appointments and internal working, the independence of the Central Bank is unequivocally ensured, the same cannot be said of its right to pursue monetary policy without coordination with the central government. The role of the Central Bank has turned out to be subordinate and advisory in nature.

Which one of the following best supports the conclusion drawn in the passage?

  1. A decision of the chairman of the Central Bank to increase the bank rate by two percentage points sent shock-waves in industry, academic and government circles alike.
  2. Government has repeatedly resorted to monetisation of the debt despite the reservation of the Central Bank.
  3. The Central Bank does not need the central government’s nod for replacing soiled currency notes.
  4. The inability to remove coin shortage was a major shortcoming of this government.

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