Q. Consider the following:
Growth rate of the economy
Replacement demand
Reserve stock requirements
Budget Allocations to various department
Which among the above are used by RBI to estimate the demand for banknotes?
Answer: 1, 2 & 3
Notes:
- Growth rate of the economy - Higher GDP growth requires more currency in circulation.
- Replacement demand - Old, soiled banknotes need to be replaced regularly.
- Reserve stock requirements - RBI needs to maintain an adequate reserve stock for distribution.
- Budget Allocations to various departments - This does not directly impact banknote demand.
Above question is part of 10000+ MCQs for UPSC (Prelims) Paper-1 course in GKToday Android app.
