UPSC Prelims 2015— Question 86

Correct answer: Option C. Bank rate and open market operations are monetary-policy instruments used by the central bank. Public debt and public revenue are components of fiscal policy rather than monetary policy. Hence statements 1 and 2 are the relevant monetary-policy components. Option-wise analysis: Option A: “1 only” is incorrect. It does not match the specific fact, definition, institutional role, geographical association, or constitutional/economic principle required here. The key distinction is the one identified in the core explanation, so this option can be eliminated. Option B: “2, 3 and 4” is incorrect. It does not match the specific fact, definition, institutional role, geographical association, or constitutional/economic principle required here. The key distinction is the one identified in the core explanation, so this option can be eliminated. Option C: “1 and 2” is correct. It directly matches the factual or conceptual requirement tested by the question and is supported by the principle explained above. Option D: “1, 3 and 4” is incorrect. It does not match the specific fact, definition, institutional role, geographical association, or constitutional/economic principle required here. The key distinction is the one identified in the core explanation, so this option can be eliminated. Prelims takeaway: Focus on the precise institutional role, constitutional provision, geographical association, or technical definition being tested. UPSC questions often place a broadly familiar fact beside a narrowly incorrect qualifier; identifying that qualifier is essential for elimination.