A: WPI measure price rise at the wholesale level where wholesale means sale in large quantities and meant for resale.
B: Producer Price Index means the prices of goods as they are sold to the whole sales by the producers.
C: The price of electricity in the CPI is the Industrial tariff & not the consumer tariff.
1) A & B are correct
2) All are correct
3) None are correct
4) Only A is correct
5) Only B is correct
ANSWER- 1
Q2. Which of the following statement/s is/are correct:
A: Inflation targeting focuses mainly on achieving price stability as the ultimate objective of Monetary policy.
B: Monetary Policy & fiscal policy have to converge for achievement of inflation targeting.
C: The Basket of items in CPI does not include machinery, chemicals etc.
1) Only 2 & 3 are correct
2) All the above are correct
3) None of the above is correct.
4) Only 1 is correct
5) None of these
ANSWER-2
Q3. If people correctly anticipate an increase in aggregate demand, the result is -
1) An increase in the real value of outstanding government debt.
2) Workers demanding higher money wages to keep the real wage unchanged.
3) There are no predictable results associated with an anticipated increase in aggregate demand.
4) Lower rate of inflation in the current time period.
5) None of these
ANSWER-2
Q4. Which of the following statement/s is/are correct-
A: Deflation occurs when in economy’s annual Headline inflation indicator typically the CPI enters negative Territory.
B: Deflation can breed deflation, leading to what is known as a Deflationary spiral.
C: If GDP exceeds its potential, inflation will decelerate and if GDP falls below its potential level the inflation will accelerate.
1) Only 1 & 2 are correct.
2) All the above are correct
3) None of the above is correct.
4) Only 1 is correct
5) Only 2 & 3 are correct
ANSWER- 1
Q5. Which of the following statements are correct-
A: CPI-AL & CPI-UNME are not considered as robust national inflation measures because they are designed for specific groups of population.
B: The WPI vary across regions & also across cities.
C: WPI and CPI differ in terms of their weightage pattern.
1) Only 1 & 3 are correct
2) All the above are correct
3) None of the above is correct
4) Only 1& 2 are correct
5) Only 2 & 3 are correct
ANSWER-1
Q6. Match the following:
(i) Deflation (a) Reduction of Rate of Inflation
(ii) Stagflation (b) When there is general fall in the level of prices.
(iii) Disinflation (c) combination of inflation and rising unemployment due to recession.
1) 1-(a) 2-(b) 3-(c)
2) 3-(a) 1-(b) 2-(c)
3) 2-(b) 3-(a) 1-(c)
4) 3-(b) 2-(c) 1-(a)
5) None of these
ANSWER-2
Q7. Which of the following statements are correct?
A: Mild Inflation is seen as “greasing the wheels of commerce”.
B: The High Inflation will lead to increase in the purchasing power of then Income.
C: Demand pull Inflation is caused by increase in the demand due to increased private & Government spending etc.
1) All the above are correct
2) Only 1 and 3 are correct
3) Only 2 is correct
4) Both 2 & 3 are correct
5) None of these
ANSWER-1
Q8. Which of the following can be undertaken to control inflation?
1) Control on public expenditure
2) Control on hoarding and black marketing
3) Effective control on credit
4) All the above
5) None of these
ANSWER- 4
Q9. Which among the following can result in ‘demand pull inflation’?
A: increase in subsidy on LPG
B: increase in fuel prices
C: decrease in income tax rates
1) 1 and 2 only
2) 1 and 3 only
3) 2 and 3 only
4) 1, 2 and 3
5) None of these
ANSWER-2
Q10. Which of the following deficit is more inflationary?
1) Fiscal Deficit
2) Revenue Deficit
3) Monetized Fiscal Deficit
4) Budget Deficit
5) None of these
ANSWER-4
