RRB NTPC 2026 · Question 10 of 93

'Tight monetary policy' is best described as a policy that:

AIncreases money supply and decreases the interest rate.
BDecreases money supply and increases the interest rate.Correct
CIncreases both money supply and interest rates.
DDecreases both money supply and interest rates.

Answer: B. Decreases money supply and increases the interest rate.

Explanation

Tight monetary policy, or contractionary policy, is implemented by increasing interest rates to decrease the money supply. This approach is used to curb inflation when the economy is seen as overheating. It involves higher borrowing costs, which slows consumer spending and business investments.

Source: RRB NTPC CBT-I Memory-Based Paper 16 March 2026 S1 (careerpower test-platform compilation) · memory-based

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