Inflation and Price Indices — MCQ Practice
Interactive MCQ Practice
Test your knowledge. Click “Solve” to reveal options, select your answer, then check the result. 5 questions available.
Which of the following statements regarding India's inflation measurement and targeting framework is/are correct? 1. The Consumer Price Index (CPI) (Combined) is the headline inflation measure for monetary policy in India. 2. The Wholesale Price Index (WPI) includes services in its basket of goods. 3. The Monetary Policy Committee (MPC) is mandated to achieve an inflation target of 6% with a tolerance band of +/- 2%. 4. The base year for CPI (Combined) is 2011-12.
Consider the following statements regarding 'Core Inflation': 1. It excludes volatile items like food and fuel from the overall inflation calculation. 2. It is considered a better indicator of underlying demand-side inflationary pressures. 3. It is less relevant for monetary policy decisions compared to headline inflation.
Which of the following factors would primarily lead to 'Cost-Push Inflation' in India? 1. A significant increase in global crude oil prices. 2. A sharp rise in government expenditure leading to higher aggregate demand. 3. Widespread crop failure due to erratic monsoon affecting agricultural output. 4. A substantial increase in minimum wages across various sectors.
In the context of India's inflation targeting framework, if the RBI fails to meet the inflation target for three consecutive quarters, what is the mandated action?
Which of the following statements best describes the 'Base Effect' in inflation measurement?