Bissoy.com
Doctors Medicines MCQs Q&A

Consider the statements: RBI uses inflation targets to decide its various monetary policy rates.  RBI only considers only CPI for inflation targeting. RBI uses CPI along with WPI for inflation targeting. Inflation targeting guarantees economic stability in a country. Which of the following statements are true?

Consider the statements: RBI uses inflation targets to decide its various monetary policy rates.  RBI only considers only CPI for inflation targeting. RBI uses CPI along with WPI for inflation targeting. Inflation targeting guarantees economic stability in a country. Which of the following statements are true? Correct Answer Both 1 and 2

The correct answer is Both 1 and 2.

  • Reserve Bank of India (RBI) is the key decision-maker for the country’s financial system and is mandated with ensuring its stability. RBI currently uses inflation targeting as a tool to decide monetary policy rates. 
  • The Monetary Policy Committee (MPC) of the RBI uses CPI data to control inflation.
  • Inflation targeted policy cannot ensure economic stability in the country.
  • The Monetary Policy is decided by a 6 member committee called The Monetary Policy Committee. Out of the 6 members, 3 are from RBI and the other 3 are appointed by GOI.
  • The MPC is required to meet at least four times a year. Each member of the MPC has one vote, and in the event of an equality of votes, the Governor has a second or casting vote.
  • Consumer price index (CPI) is a detailed measure used for the estimation of price changes in a basket of goods and services representative of consumption expenditure in an economy.
  • Various consumption items have been classified into categories like Food and beverages, Pan and tobacco, Clothing, etc, and on the basis of consumer categories like urban, rural, and combined. The final overall index of the price is then calculated based on these categories.
  • The CPI is released by The National Statistical Organisation (NSO), Ministry of Statistics and Programme Implementation. The CPI for every month is released in the succeeding month.
  • The current minister for Statistics and Programme Implementation (MoSPI) is D. V. Sadananda Gowda.
  • Basic Information about Reserve Bank of India (RBI):
    • It is the regulator of the entire banking system in India.
    • Governor: Shaktikanta Das (25th governor). 
    • Founded: 1 April 1935 in Kolkata.
    • Headquarter: Mumbai. 

Related Questions

Consider the following statements with respect to Consumer Price Index and Wholesale Price Index in India: 1. The WPI is calculated for only goods and CPI is calculated for both goods and services.  2. The WPI is published by the Office of the Economic Advisor in the Ministry of Commerce and Industry while the CPI is published by the Central Statistical Office. 3. The WPI is published on a weekly basis for primary articles and fuel and power and is published monthly for the rest of the items, whereas the CPI is released on a monthly basis. 4. The WPI measures inflation in the initial stages of the supply chain whereas the CPI measure inflation in the later stages of the supply chain. Which among the above given statements are correct?
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?
Which of the following correctly explains the difference between WPI and CPI inflation? 1. CPI accounts for the services too unlike WPI. 2. CPI measures inflation down to the retail consumer level, unlike WPI. 3. Both indicators can be used for the measurement of inflation. Choose the correct answer using the codes below:
Consider the following statements : a. The Reserve Bank of India is the main agency for implementing the monetary policy. b. To boost economic development is the aim of monetary policy. c. Bank Rate is an instrument of monetary policy. Which of the statements given above are correct ?
With reference to India, consider the following statements: 1. The Wholesale Price Index (WPI) in India is available on a monthly basis only. 2. As compared to Consumer Price Index for Industrial Workers (CPI(IW)), the WPI gives less weight to food articles. Which of the statements given above is/are correct?
In the following question, out of the four alternatives, select the alternative which best expresses the meaning of idiom/phrase. The CPI and the CPI(M) in Kerala are at daggers drawn after Eldo Abraham, CPI legislator, was hurt in police baton charge during a CPI protest on Tuesday.
Which of the following statements are correct regarding RBI's 1st bi-monthly monetary policy of 2022-23 ? India's gross domestic Product (GDP) growth at 7.4% for the FY23 RBI has also hiked its Consumer Price Index (CPI) based inflation forecast for FY23 to 5.7% This projection is on an assumption of crude oil (Indian basket) at $100 per barrel during FY23 and supply chain disruptions due to the ongoing Russia-Ukraine war
Given below are four jumbled sentences.Select the option that gives their correct order.  A. because a normal consequence of reducing inflation and maintaining currency stability is increasing unemployment and increasing interest rates.  B.Government and central banks are limited in the number of goals they can achieve in the short term.   C.For instance, there may be pressure on the government to reduce inflation, reduce unemployment, and reduce interest rates while maintaining currency stability.  D.If all of these are selected as goals for the short term, then policy is likely to be incoherent, 
In the following passage some of the words have been left out. Read the passage carefully and select the correct answer for the given blank out of the four alternatives.
Targeting inflation comes from a belief that policy should be _________ and transparent, so that the private sector can factor this ___________ their decision-making. The question that this ________ is: are there more "complicated" policies which _________ better? I just note that one such policy is called "nominal income targeting". _____________ it is more complicated and the private sector is deemed to be intellectually challenged. policy should be _________ and transparent,
Consider the following statements 1. Value of transient stability limit will be lower than steady-state stability limit 2. Transient stability limit is the maximum flow of power through a particular point in the power system without loss of stability when large and sudden disturbances occur 3. Critical clearing angle is related to the steady-state stability limit Which of the above statement(s) is/are correct?