Retail core inflation is calculated excluding which of the following ? 1. Food and beverages 2. Fuel and light 3. Transport and communication 4. Clothing and Education Select the answer using the code given below:
- A.1 and 2 only
- B.1, 2 and 3 only
- C.1, 2, 3 and 4
- D.3 and 4 only
Correct answer
Explanation
The correct answer is A, 1 and 2 only. Retail core inflation is the rise in the Consumer Price Index after leaving out its two most volatile groups, food and beverages and fuel and light.
Food prices swing with the monsoon and harvests, and fuel prices move with world crude oil and gas prices. These shocks are often short-lived and lie largely outside the control of monetary policy. Removing them leaves the steadier, underlying trend of prices, which the Reserve Bank of India watches closely when it sets the repo rate. Core inflation therefore still covers groups such as clothing, housing, health, education, transport and communication.
B is wrong because transport and communication stay inside the core basket. C is wrong because clothing and education are also part of core inflation, so excluding all four groups would leave very little to measure. D is wrong because it removes two stable groups and keeps the two volatile ones that core inflation exists to strip out.
Exam tip: core inflation = headline CPI minus food and beverages and fuel and light.
Practice Questions
View allThe Reserve Bank of India defines narrow money as
- A.CU (currency notes + coins) + DD (net demand deposits held by commercial banks)
- B.CU + DD + saving deposits with post office savings banks
- C.CU + DD + net time deposits of commercial banks
- D.CU + DD + net time deposits of commercial banks + total deposits of post offices
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Narrow money, M1, is currency held by the public plus net demand deposits with commercial banks, the most liquid forms of money.
Read the full explanation →In National Income (NI) accounts, Personal Income (PI) is defined as
- A.NI - undistributed profits - net interest payments made by households - corporate tax + transfer payments to the households from the government and firms
- B.NI - undistributed profits - corporate tax + transfer payments to the households from the government and firms
- C.undistributed profits - net interest payments made by households + transfer payments to the households from the government and firms
- D.undistributed profits - net interest payments made by households - corporate tax
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Personal Income is the part of National Income that actually reaches households, plus the transfers they receive. National Income counts all factor incomes earned in the economy, but not all of it is paid out to people.
Read the full explanation →The Khushkhera-Bhiwadi-Neemrana Investment Region is a node of the Delhi Mumbai Industrial Corridor in which state?
- A.Haryana
- B.Rajasthan
- C.Uttar Pradesh
- D.Gujarat
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Read the full explanation →The Vikram Udyogpuri integrated industrial township, a node of the Delhi Mumbai Industrial Corridor, lies near which city?
- A.Indore
- B.Ujjain
- C.Bhopal
- D.Jabalpur
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Vikram Udyogpuri is an integrated industrial township developed near Ujjain in Madhya Pradesh as one of the state's two nodes in the Delhi Mumbai Industrial Corridor.
Read the full explanation →The National Industrial Corridor Development Corporation works under which ministry?
- A.The Ministry of Road Transport and Highways
- B.The Ministry of Commerce and Industry
- C.The Ministry of Heavy Industries
- D.The Ministry of Railways
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The National Industrial Corridor Development Corporation, which was earlier the Delhi Mumbai Industrial Corridor Development Corporation, is the implementing agency of the National Industrial Corridor Development Programme and functions under the Department for Promotion of Industry and Internal Trade in that ministry.
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