Explanation Item 1 is not correct: Reducing fiscal budget is an objective of fiscal policy, not monetary policy. Fiscal policy focuses on government spending and taxation, whereas monetary policy deals with money supply and interest rates.
Item 2 is not correct: Monetary policy mainly influences aggregate demand through credit availability and interest rates rather than directly managing aggregate supply. While monetary policy aims to balance aggregate demand with aggregate supply, direct management of aggregate supply is generally outside its scope. It focuses more on aggregate demand management to stabilize the economy.
Item 3 is correct: Monetary policy in India does include promoting exports and import substitution as an objective by providing concessional loans and credit facilities to export-oriented and import substitution units. This helps improve the balance of payments and supports external sector stability.
Item 4 is not correct: Resource mobilization is typically associated with fiscal policy, as the government is responsible for resource mobilization to fund its programs, whereas monetary policy primarily focuses on liquidity and price stability.
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