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JAIIB IE&IFS Unit 17 — Monetary Policy and Fiscal Policy: Free MCQs with Explanations

By Swarnakshi Jha (ex-banker) · Updated 20 September 2026 · Paper 1 of the November 2026 cycle (1 November 2026)

This page is a free slice of our JAIIB IE&IFS question bank for Unit 17 — Monetary Policy and Fiscal Policy (Module B — Economic Concepts Related to Banking). The Mock Centre holds 110 questions on this unit alone, every one with a why-right / why-wrong explanation; below are the facts examiners keep returning to, five of those questions to try, and the traps that cost marks.

IE&IFS · Module B110 MCQs in the Mock Centre5 free belowPaper on 1 November 2026

Key facts examiners test from this unit

  1. Monetary = RBI (supply/availability/cost of money, bi-monthly); fiscal = government (tax + expenditure, Keynes-inspired); expansionary fights recession, contractionary fights inflation.
  2. Sections: Bank Rate Sec 49 RBI Act (long-term, no pledge, = discount rate); CRR Sec 42 (cash % of NDTL at RBI, no interest, 2006 cap removal, 4.5%×1L = ₹4,500); SLR Sec 24 BR Act (max 40%, cash/gold/securities with the bank, earns interest); MPC Sec 45ZB; SDF Sec 17 (2018 amendment). [Law update, Sep 2026] Actual CRR today: 3.00% since 29 Nov 2025 (cut from 4.00% in four 25-bp steps from 6 Sep 2025); the 4.5% figure in the sums is illustrative.
  3. MSF: overnight, dips into SLR, repo+25 bps; SDF: uncollateralised absorption, live 8-4-2022, corridor floor; corridor = SDF-repo-MSF.
Law update, September 2026. The 4.5% is the textbook's illustrative rate. The actual CRR is 3.00% (since 29 November 2025) — at 3% the answer would be ₹3,000. Always compute with the rate given in the stem. (a) wrong: 4.5% was the level restored in 2022 — but CRR has since been cut back to 3.00% (four steps of 25 bps, complete on 29 November 2025). Illustrative rates. Current CRR is 3.00% (since 29 Nov 2025) and SLR 18% — with today's CRR the RBI balance would be Rs 6,000 crore.

5 free practice questions — tap an option

Five basic questions from this unit. Answers lock on the first tap, exactly as in the exam, and a short explanation opens underneath. The Mock Centre adds the moderate and tough questions, why every other option is wrong, the concept capsule and the exam tip — with your score and revision dates tracked.

Question 1 of 5
FISCAL policy belongs to the:
Why (b): FISCAL policy belongs to THE GOVERNMENT — taxing, spending and borrowing through the Budget.
Question 2 of 5
The REVERSE REPO rate signifies the rate at which:
Why (b): The REVERSE REPO is the rate at which BANKS PARK EXCESS LIQUIDITY WITH RBI — the absorption side.
Question 3 of 5
The FRBM Act was enacted in:
Why (b): The FRBM Act was ENACTED IN 2003 — passed by Parliament in August of that year, India's fiscal-discipline charter.
Question 4 of 5
External Benchmark Lending Rate (EBLR) rules require retail/MSE loan pricing linked to:
Why (b): From Oct 2019, floating retail/MSE loans ride external benchmarks (mostly repo), resetting at least quarterly — faster monetary transmission than base rate/MCLR eras.
Question 5 of 5
Fiscal policy's two fundamental instruments are:
Why (b): The government's macro levers: how much it spends and how much it taxes — shaping aggregate demand, distribution and growth.
0 of 5 answered.

Traps in this unit

Confusable AConfusable BThe difference
MonetaryFiscalRBI money-levers vs government tax-spend
Sec 42Sec 24CRR (RBI Act) vs SLR (BR Act)
Practise all 110 questions on Unit 17. The free demo opens a slice of every subject with the same explanations; the IE&IFS Online-only pass unlocks all 3,032 IE&IFS questions, the full and module mocks, Smart Revision and the Readiness Score for one year (₹1,299). Not sure where you stand? Take the free 10-question test first.
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Independent study aid — not affiliated with, endorsed by, or sponsored by the Indian Institute of Banking & Finance (IIBF). Exam pattern, dates, fees and passing criteria are set by IIBF — always confirm the current rules at iibf.org.in. Regulatory figures verified as of September 2026; verify from official sources before relying on them in practice.