Which of the following is NOT covered by the Wholesale Price Index in India?
- A.Primary articles
- B.Fuel and power
- C.Manufactured products
- D.Services
Correct answer
Explanation
The correct answer is D, services. The wholesale price index is built entirely from the prices of goods traded in bulk, and it has exactly three major groups: primary articles, fuel and power, and manufactured products, of which manufactured products carry the largest weight. A haircut, a school fee, a bus fare or a doctor's charge never enters the index, even though services make up more than half of the country's output. A separate producer price index that would cover services has long been under preparation.
Options A, B and C name the three groups that the index does cover, so none of them can be the answer. The absence of services is one reason the consumer price index, which includes them, was preferred as the anchor for monetary policy.
Read the full article: Inflation and Price Indices: WPI, CPI and Exam Notes
Practice Questions
View allWhich index does the Reserve Bank of India use to measure inflation for its inflation targeting framework?
- A.Wholesale Price Index
- B.Consumer Price Index (Combined)
- C.Index of Industrial Production
- D.GDP deflator
Show answer
When the flexible inflation targeting framework was adopted after the amendment of the Reserve Bank of India Act in 2016, the combined rural and urban consumer price index released by the National Statistical Office was made the nominal anchor, as the Urjit Patel Committee had recommended.
Read the full explanation →The Wholesale Price Index in India is compiled and released by which body?
- A.The Reserve Bank of India
- B.The Labour Bureau
- C.The Office of the Economic Adviser
- D.The National Statistical Office
Show answer
The wholesale price index is compiled and released every month by the Office of the Economic Adviser in the Department for Promotion of Industry and Internal Trade, under the Ministry of Commerce and Industry.
Read the full explanation →Inflation that is caused by aggregate demand rising faster than the supply of goods and services is called:
- A.Cost-push inflation
- B.Demand-pull inflation
- C.Structural inflation
- D.Imported inflation
Show answer
It is described in the classic phrase as too much money chasing too few goods.
Read the full explanation →A situation of high inflation along with stagnant growth and high unemployment is known as:
- A.Reflation
- B.Disinflation
- C.Stagflation
- D.Deflation
Show answer
The word joins stagnation and inflation, and it describes the awkward situation in which prices are rising fast while output is flat and unemployment is high.
Read the full explanation →During a period of high inflation, which of the following groups usually gains?
- A.Borrowers
- B.Lenders
- C.Pensioners
- D.Holders of fixed deposits
Show answer
A loan is repaid in a fixed number of rupees, and inflation reduces what those rupees can buy. The borrower therefore returns money of smaller real value than the money received, so the real burden of the debt falls.
Read the full explanation →