AP ICET 26th April 2019 Shift-2

Read the below passage and answerthe following questions

The usual goals of monetary policy are to achieve or maintain full employment, to achieve or maintain a high rate of economic growth. and to stabilize prices and wages. Until the early 20th century, monetary policy was thought by most experts to be of little use in influencing the economy. Inflationary trends after World War II, however, caused governments to adopt measures that reduced inflation by restricting growth in the money supply.

Monetary policy is the domain of a nation’s central bank. The Federal Reserve System (commonly called the Fed) in the United States and the Bank of England of Great Britain are two of the largest such “banks” in the world. Although there are some differences between them, the fundamentals of their operations are almost identical and are useful for highlighting the various measures that can constitute monetary policy.

The Fed uses three main instruments in regulating the money supply: open market operations. the discount rate, and reserve requirements. The first is by far the most important. By buying orselling government securities (usually bonds), the Fed or a central bank — affects the money supply and interest rates. If, for example, the Fed buys government securities, it pays with a check drawnonitself. This action creates money in
the form of additional deposits from the sale of the securities by commercial banks. By adding to the cash reserves of the commercial banks. then, the Fed enables those banks to increase their lending capacity. Consequently. the additional demand for government bonds bids up their price and thus reduces their yield (i... interest rates), The purpose of this operation is to ease the availability of credit and to reduce interest rates. which thereby encourages businesses to invest more and consumers to spend more. The selling of government securities by the Fed achieves the opposite effect of contracting the money supply and increasing interest rates.

Read the below passage and answer the following questions

The jute industry occupies an important place in the national economy.It is one of the major industries in the eastern region, particularly in West Bengal. Jute. the golden fibre. meets all the standards for safe packaging in view of being a natural, renewable, biodegradable and eco-friendly product.

Globally, India is the largest producer and second largest exporter of jute goods and this sector supports the livelihood of about 40 lakh farm families. and provides direct and indirect employment to 4 lakh workers. There are 77 jute mills in the country. Of these 60 are in West Bengal. 3 each in Bihar and Uttar Pradesh, 7 in Andhra Pradesh, and one each in Assam, Orissa. Tripura and Chhattisgarh.

The production of jute is concentrated in 36 districts of West Bengal, Orissa. Bihar, Assam, Meghalaya, Tripura and Andhra Pradesh. In the 2008-09 jute season (July - June), the production of rawjute was 90 lakh bales (180 kgs each).