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Inflation & Price Indices

14 questions in Indian Economy.

Asked in 2020, 2015, 2013, 2011, 2010, 2002, 2001, 1998, 1997

2020 · Q67Indian EconomyInflation & Price Indiceseasy

Consider the following statements : 1. The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI). 2. The WPI does not capture changes in the prices of services, which CPI does. 3. Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates. Which of the statements given above is/are correct ?

  1. (a)1 and 2 only
  2. (b)2 only
  3. (c)3 only
  4. (d)1, 2 and 3
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Official answer(a) 1 and 2 only

2015 · Q87Indian EconomyInflation & Price Indiceseasy

With reference to inflation in India, which of the following statements is correct?

  1. (a)Controlling the inflation in India is the responsibility of the Government of India only
  2. (b)The Reserve Bank of India has no role in controlling the inflation
  3. (c)Decreased money circulation helps in controlling the inflation
  4. (d)Increased money circulation helps in controlling the inflation
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Official answer(c) Decreased money circulation helps in controlling the inflation

2011 · Q4Indian EconomyInflation & Price Indicesmoderate

India has experienced persistent and high food inflation in the recent past. What could be the reasons? 1. Due to a gradual switchover to the cultivation of commercial crops, the area under the cultivation of food grains has steadily decreased in the last five years by about 30%. 2. As a consequence of increasing incomes, the consumption patterns of the people have undergone a significant change. 3. The food supply chain has structural constraints. Which of the statements given above are correct?

  1. (a)1 and 2 only
  2. (b)2 and 3 only
  3. (c)1 and 3 only
  4. (d)1, 2 and 3
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Official answer(b) 2 and 3 only

2011 · Q13Indian EconomyInflation & Price Indiceseasy

A rapid increase in the rate of inflation is sometimes attributed to the "base effect". What is "base effect" ?

  1. (a)It is the impact of drastic deficiency in supply due to failure of crops
  2. (b)It is the impact of the surge in demand due to rapid economic growth
  3. (c)It is the impact of the price levels of previous year on the calculation of inflation rate
  4. (d)None of the statements (a), (b) and (c) given above is correct in this context
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Official answer(c) It is the impact of the price levels of previous year on the calculation of inflation rate

2010 · Q19Indian EconomyInflation & Price Indiceseasy

Which one of the following statements is an appropriate description of deflation ?

  1. (a)It is a sudden fall in the value of a currency against other currencies
  2. (b)It is a persistent recession in both the financial and real sectors of economy
  3. (c)It is a persistent fall in the general price level of goods and services
  4. (d)It is a fall in the rate of inflation over a period of time
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Official answer(c) It is a persistent fall in the general price level of goods and services