Inflation

1.Meaning and Types of Inflation

• Meaning of Inflation and Purchasing PowerImportance 3/5
  How is inflation defined, and what does it do to the purchasing power of money? Is a rise in the price of one item inflation? Be clear on the difference between a general rise in prices and a change in a single price, and between the price level and the inflation rate. Which bodies measure inflation in India?
• Types of Inflation by RateImportance 3/5
  Learn the five labels for inflation by its rate, from the mildest to the most extreme, and the rough range of each. These ranges are conventions that differ between sources, not official limits. Understand how mild inflation and galloping inflation change saving, lending and trust in money. What causes hyperinflation, and which episodes are well known? What is the standard academic threshold for hyperinflation (Cagan's monthly rate)?
• Deflation and Why It Is HarmfulImportance 4/5UPSC 2010
  Understand what deflation is and what causes it. Why are falling prices harmful? Think about what people do with spending and borrowing when prices keep falling, and what this does to demand, jobs and the risk of depression.
• DisinflationImportance 4/5
  Is disinflation the same as deflation? Be clear on the difference. Work through an example, such as an onion price series, in which the inflation rate falls year after year, and ask what is happening to the price itself.
• ReflationImportance 3/5
  What does reflation mean, and when is it used? Understand the tools policymakers use for it. How does it differ from ordinary inflation?
• SkewflationImportance 3/5
  Use a seasonal rise in onion prices as an example to understand skewflation. How does it differ from general inflation, in which most prices rise together?
• Other Inflation Terms: Repressed Inflation, Asset Price Inflation and ShrinkflationImportance 2/5
  Be clear about the meaning of each term. Which of these is held down by price controls and rationing? How does asset price inflation differ from consumer price inflation, and why does it matter for financial stability? Why might a price index miss shrinkflation?

2.Inflation Indices

• What a Price Index Is: Base Year, Basket and WeightsImportance 3/5UPSC 1998
  How does an index number work? Understand the base year and its fixed starting value, using a simple example of two years of price rise. Why does an index need a basket and weights, and why do weights stay fixed until the base is revised? How is the inflation rate read from an index?
• Base EffectImportance 4/5UPSC 2011
  Does a low base raise or lower the measured inflation rate, and what about a high base? Understand how the previous year's price level changes the year-on-year rate, using an onion price example. How do seasonal swings in food and fuel create favourable and unfavourable base effects in news reports?
• Consumer Price Index and Its Series in IndiaImportance 5/5UPSC 2015, 2020
  What does the Consumer Price Index measure? Know the CPI series used in India (industrial workers, agricultural labourers, rural labourers, and rural, urban and combined), which body compiles each, and what each is used for. Why do group-specific series exist? Does CPI include indirect taxes and services? Know the current base year of each series.
• New CPI Series (Base 2024): Basket and WeightsImportance 4/5
  Why was the CPI revised to a 2024 base? Understand the new structure of divisions, the wider basket, rural housing and the use of online prices. Know the survey the weights come from. Did the weight of food rise or fall, and what does that change for the volatility of headline inflation?
• Consumer Food Price IndexImportance 2/5
  Which prices does the Consumer Food Price Index track, and how does it relate to the CPI? Why is it the usual measure of food inflation in official releases?
• Headline Inflation and Core InflationImportance 4/5
  Which items does core inflation leave out, and why do policymakers watch it next to headline inflation? Understand why food, fuel and core inflation are read separately. Why can gold and silver prices distort core inflation? Know the core measure that the RBI reports with precious metals excluded.
• Wholesale Price Index: Compiler, Coverage and Major GroupsImportance 5/5UPSC 4 Years
  Who compiles the Wholesale Price Index, and how often? At what stage of trade are its prices taken, and how do they differ from retail prices? Why are services outside it? Remember its three major groups and which one is the largest. What is it used for?
• New WPI Series (Base 2022-23)Importance 4/5
  Know who recommended the revision of the WPI to a 2022-23 base. Understand the main changes: the larger basket, the new basis for weights, the shift of crude petroleum and natural gas between groups, the new kinds of electricity added, and the dropping of the minimum support price as a price source.
• Producer Price Index and the Move from WPIImportance 4/5
  Compare the Producer Price Index with the WPI on services, classification and export-oriented units. How do the Output PPI and the Input PPI differ in the price taken? Which producer price indices does India now compile? Why does a PPI suit double deflation? What is the plan to move from WPI to PPI, and does WPI continue alongside for a time?
• GDP Deflator: Meaning and CalculationImportance 4/5
  Be able to explain how the GDP deflator is derived from nominal and real GDP, using a simple one-good example over two years. Why is it called an implicit deflator, and which body publishes it? How do WPI, CPI and now PPI help move GDP between current and constant prices? What is double deflation?
• CPI, WPI and GDP Deflator ComparedImportance 5/5UPSC 1997, 2010, 2020
  How do the three differ on services, intermediate and capital goods, and weights? Do imported goods still enter the WPI basket after its switch to output-based weights? Why can WPI inflation and CPI inflation move apart? Why is the GDP deflator the broadest of the three?

3.Causes of Inflation

• Demand-Pull InflationImportance 5/5UPSC 2013, 2021
  Understand the four sectors whose demand can outrun what the economy produces, and what can cause it (government spending and taxes, interest rates, money supply). Why is it described as too much money chasing too few goods? Sources differ on whether currency depreciation belongs here or under cost-push, so understand the reasoning for each view.
• Cost-Push InflationImportance 5/5UPSC 2013
  Understand how higher input costs or a supply shortage push up prices. Know its usual sources: wages, raw materials such as oil, monopoly power, natural disasters and exchange rate changes. How does it differ from demand-pull in what moves first and in the effect on output?
• Monetary Inflation and Deficit FinancingImportance 5/5UPSC 2013, 2021
  Why does money supply growing faster than goods raise prices? Is financing a budget deficit with newly created money more inflationary than borrowing from the market? Understand why. How does reducing money circulation help control inflation? Remember the basic idea of the quantity theory of money.
• Imported Inflation and Exchange Rate Pass-ThroughImportance 4/5
  Does a weaker rupee raise domestic prices? Understand how global prices and the exchange rate together feed into inflation, and which imports matter most for India. How do fuel price rises spread through transport and input costs, and what role do fuel taxes play in how much of a global price rise reaches consumers?
• Supply Shocks, Bottleneck Inflation and Structural InflationImportance 3/5
  Learn how disruptions to supply, such as broken supply chains in the COVID-19 period, raise prices. What is bottleneck inflation? How does structural inflation, linked to lasting supply constraints in developing economies, differ from a one-time shock?
• Food Inflation in India and Its DriversImportance 4/5UPSC 2011
  Why has food inflation in India been persistent and volatile, and why does it hurt welfare so much? Understand the constraints in the food supply chain, the roles of the monsoon and of perishables, and the weight of food in household budgets. What link does the Economic Survey 2024-25 draw between extreme weather and food inflation? Know where food inflation stands now and what is driving it.
• Cobweb Phenomenon in Farm PricesImportance 2/5
  Using pulses as an example, understand the cobweb phenomenon: how the price of a farm good in one season shapes output in the next, and why the cycle repeats.
• Wage-Price Spiral and Inflation ExpectationsImportance 3/5
  When do rising wages and rising prices keep feeding each other? Understand the loop between prices, wage demands and costs. What are inflation expectations, and why can inflation continue after the first shock has passed (inflation inertia)?
• Measures to Control Inflation: Monetary, Fiscal and Supply-SideImportance 4/5UPSC 1998, 2015
  Which measures reduce demand-led inflation? Understand the direction of monetary measures (interest rates, CRR, SLR, open market operations) and fiscal measures (taxes and spending). What other measures ease supply, such as price, import or wage controls, buffer stocks, export curbs, stock limits and duty cuts? Why does interest rate policy work weakly against supply-driven inflation?

4.Effects of Inflation

• Who Gains and Who Loses from InflationImportance 4/5UPSC 2013
  Who gains and who loses when prices rise? Understand how debtors, creditors, savers, fixed-income earners and unorganised-sector wage earners are affected. Does inflation hurt poor households more than rich ones, and why? Be clear on nominal versus real income, and fixed versus variable income.
• Effects of Inflation on Exchange Rate, Trade, Growth and EmploymentImportance 3/5
  Understand how inflation affects the exchange rate, the trade balance, growth and employment. How does a higher inflation rate than trading partners' affect export competitiveness? How does uncertainty about prices affect investment, and how does inflation affect government revenue and spending?
• Inflation Tax and Bracket CreepImportance 3/5
  In what sense can inflation work like a tax, and who gains from it? What is bracket creep, and how does it raise the tax paid when incomes rise only in money terms?
• Inflation PremiumImportance 2/5
  Remember how the real interest rate is worked out from the nominal rate and inflation. What is the inflation premium, and how does it link the nominal rate, expected inflation and the real rate?
• Costs of Inflation: Menu Costs and Shoe-Leather CostsImportance 2/5
  What are menu costs, and who bears them? What are shoe-leather costs, and who bears them? Understand also how inflation distorts relative prices, and why that leads to poor use of resources.

5.Phillips Curve and Stagflation

• Phillips Curve: Short Run and Long RunImportance 4/5UPSC 2011
  What relation does the Phillips curve show, and who developed it? Understand the wage mechanism behind it. How does the long-run curve differ from the short-run curve once expectations are included? Why is the curve said to have flattened?
• StagflationImportance 4/5
  Be clear about what stagflation is. Understand the 1970s episode and why it challenged the Phillips curve. Why does stagflation create a policy dilemma: what does tightening do to growth, and what does easing do to inflation?
• Full Employment, Natural Rate of Unemployment and NAIRUImportance 3/5
  Does full employment mean zero unemployment? Know what the natural rate of unemployment includes. Understand NAIRU, and what happens to inflation when unemployment falls below it. Why is NAIRU hard to estimate in India?

6.Business Cycles

• Business Cycle and Its PhasesImportance 3/5UPSC 2000
  What is a business cycle, and how does it differ from the long-term growth trend and from structural change? Remember the phases in order and the turning points between them.
• Recession and DepressionImportance 3/5
  How does a recession differ from a depression in depth and duration? Know the features of a depression. Is "technical recession" an official rule or a convention? Know how it is commonly defined.
• Recession and Inflation: Demand-Led versus Supply-Led SlowdownsImportance 2/5
  Why does a demand-led slowdown usually bring lower inflation? What is the exception when a slowdown starts on the supply side, for example a drought or a lockdown? How long does its effect on inflation usually last?
• Inflationary Gap, Deflationary Gap and OverheatingImportance 3/5
  Know the difference between an inflationary gap and a deflationary gap at full employment. What is overheating, and what signs show it? Understand how these gaps link to the output gap.
• Leading, Lagging and Coincident IndicatorsImportance 2/5
  What is the difference between leading, lagging and coincident indicators? Of PMI, unemployment, IIP and GDP, which lead the cycle, which lag it and which move with it?
• Pro-Cyclical and Counter-Cyclical PolicyImportance 2/5
  Understand what pro-cyclical and counter-cyclical policy mean. How should the phase of the cycle guide policy in a downturn and in a boom?

1. 1.

   With reference to the Wholesale Price Index (WPI) in India, consider the following statements:
   1. It is published monthly by the Office of the Economic Adviser in the Department for Promotion of Industry and Internal Trade.
   2. It tracks price changes of both goods and services traded in bulk.
   3. It tracks basic prices, without transport costs, indirect taxes and the retail margin.
   Which of the statements given above is/are correct?

   1. A1 and 2 only
   2. B2 and 3 only
   3. C1 and 3 only
   4. D1, 2 and 3
2. 2.

   As of October 2026, consider the following statements about consumer price indices in India:
   1. The indices for industrial workers, agricultural labourers and rural labourers are published monthly by the Labour Bureau.
   2. CPI-Combined is computed by combining the CPI-Rural and CPI-Urban indices.
   3. CPI-Combined is published by the Labour Bureau under the Ministry of Labour and Employment.
   4. The latest CPI-Combined series released by the government has 2012 as its base year.
   How many of the above statements are correct?

   1. AOnly one
   2. BOnly two
   3. COnly three
   4. DAll four
3. 3.

   As of October 2026, with reference to the Consumer Price Index of India with base year 2024, consider the following statements:
   1. Its item weights are derived from the Household Consumption Expenditure Survey 2023-24.
   2. It covers rural housing.
   3. The weight of food and beverages in it is higher than in the earlier 2012-base series.
   Which of the statements given above is/are correct?

   1. A1 and 2 only
   2. B2 and 3 only
   3. C1 and 3 only
   4. D1, 2 and 3
4. 4.

   In an economy, nominal GDP in a year is ₹2,100 crore and real GDP, measured at base-year prices, is ₹2,000 crore. Which one of the following correctly gives the GDP deflator and its meaning?

   1. A95, indicating that prices have fallen by 5 per cent since the base year
   2. B105, indicating that real output is 5 per cent higher than in the base year
   3. C110, indicating that prices have risen by 10 per cent since the base year
   4. D105, indicating that prices have risen by 5 per cent compared to the base year
5. 5.

   As of October 2026, consider the following statements about the CPI, the WPI and the GDP deflator in India:
   1. Inputs, intermediate goods and capital goods bought by firms are taken into account by the WPI but not by the CPI.
   2. In the GDP deflator the weights differ according to the production level of each good and service, whereas CPI weights stay fixed until the base year is revised.
   3. In the WPI series with base year 2022-23, item weights are based on Net Traded Value (domestic production plus net imports).
   4. The GDP deflator captures price changes in services as well as goods, whereas the WPI covers goods only.
   How many of the above statements are correct?

   1. AOnly one
   2. BOnly two
   3. COnly three
   4. DAll four
6. 6.

   Consider the following statements:
   Statement-I: If the price of an item rises by the same absolute amount in each of two successive years, the inflation rate for the second year works out lower than for the first.
   Statement-II: The inflation rate of a year is measured against the price level of the previous year, which is higher in the second year than in the first.
   Which one of the following is correct in respect of the above statements?

   1. ABoth Statement-I and Statement-II are correct and Statement-II explains Statement-I
   2. BBoth Statement-I and Statement-II are correct and Statement-II does not explain Statement-I
   3. CStatement-I is correct but Statement-II is incorrect
   4. DStatement-I is incorrect but Statement-II is correct
7. 7.

   The price of an item in four consecutive years is ₹100, ₹110, ₹118 and ₹120. Which one of the following best describes the situation?

   1. ADeflation, because the rate of inflation is falling year after year
   2. BReflation, because prices are rising after a period of contraction in the economy
   3. CSkewflation, because the price of only one item is rising while others stay unchanged
   4. DDisinflation, because prices continue to rise but the rate at which they rise is slowing down
8. 8.

   Consider the following statements about a period of falling prices (deflation):
   1. People may postpone purchases because holding cash earns a positive real yield.
   2. Borrowers become more willing to borrow even for productive investment, as loans are repaid in cheaper rupees.
   3. By raising demand in the economy, it tends to reduce unemployment.
   How many of the above statements are correct?

   1. AOnly one
   2. BOnly two
   3. CAll three
   4. DNone
9. 9.

   Consider the following pairs:

   Term	Meaning
   1. Skewflation	A rise in the prices of certain items while the prices of others remain unchanged
   2. Reflation	A fall in the rate of inflation while prices continue to rise
   3. Bottleneck inflation	A price rise caused by a sharp fall in the supply of goods while demand remains unchanged

   Which of the pairs given above is/are correctly matched?

   1. A1 and 2 only
   2. B2 and 3 only
   3. C1 and 3 only
   4. D1, 2 and 3
10. 10.

    Match List I with List II:

    List I (Term)	List II (Description)
    A. Cobweb phenomenon	1. Aggregate demand grows faster than productive capacity, causing high inflation and asset price bubbles
    B. Wage-price spiral	2. Rising wages and rising prices form a feedback loop, each driving the other
    C. Full employment	3. A rise in a farm good's price leads to overproduction next season, then a price fall and underproduction after that
    D. Overheating of the economy	4. All available resources are used efficiently and unemployment is only at its natural rate

    Select the correct answer using the code given below:

    1. AA-1, B-2, C-4, D-3
    2. BA-3, B-4, C-1, D-2
    3. CA-2, B-3, C-4, D-1
    4. DA-3, B-2, C-4, D-1
11. 11.

    Consider the following statements:
    Statement-I: According to the Phillips curve, the lower an economy's rate of unemployment, the more rapidly wages rise and the higher the inflation.
    Statement-II: In the 1970s several economies experienced high levels of both inflation and unemployment.
    Which one of the following is correct in respect of the above statements?

    1. ABoth Statement-I and Statement-II are correct and Statement-II explains Statement-I
    2. BBoth Statement-I and Statement-II are correct and Statement-II does not explain Statement-I
    3. CStatement-I is correct but Statement-II is incorrect
    4. DStatement-I is incorrect but Statement-II is correct
12. 12.

    Which one of the following best distinguishes demand-pull inflation from cost-push inflation?

    1. ADemand-pull follows from higher input costs in production, whereas cost-push follows from a rise in aggregate demand
    2. BDemand-pull arises when aggregate demand exceeds what the economy can produce, whereas cost-push arises from higher input costs or a supply shortage
    3. CDemand-pull arises from a rise in production costs passed on to buyers, whereas cost-push arises from easy monetary conditions that raise spending
    4. DDemand-pull usually occurs in a contracting economy with falling output, whereas cost-push usually occurs in an expanding economy with rising output
13. 13.

    Consider the following statements about the effects of inflation:
    1. Wage earners in the unorganised sector are hurt because their wages do not keep up with inflation.
    2. Creditors lose purchasing power on the money they have lent.
    3. The real burden of debt falls for debtors.
    4. Bracket creep lowers the tax burden of taxpayers whose incomes rise only in money terms.
    How many of the above statements are correct?

    1. AOnly one
    2. BOnly two
    3. COnly three
    4. DAll four
14. 14.

    As of October 2026, with reference to the Wholesale Price Index with base year 2022-23, consider the following statements:
    1. Its revision was recommended by a Working Group headed by Prof. Ramesh Chand.
    2. Crude petroleum and natural gas have been moved from Primary Articles to Fuel and Power.
    3. The minimum support price continues to be used as a price source for agricultural items.
    Which of the statements given above is/are correct?

    1. A1 only
    2. B1 and 2 only
    3. C2 and 3 only
    4. D1, 2 and 3
15. 15.

    With reference to the Producer Price Index (PPI) and the Wholesale Price Index (WPI) in India, consider the following statements:
    1. Since its 2011-12 revision the WPI has been measured at basic price, so it is similar to the Output PPI in price concept.
    2. The Input PPI is based on the purchaser's price.
    3. Services are covered by the WPI but not by the PPI.
    Which of the statements given above is/are correct?

    1. A1 and 2 only
    2. B2 and 3 only
    3. C1 and 3 only
    4. D1, 2 and 3
16. 16.

    Consider the following statements about the causes of inflation and its control:
    1. Creating new money to finance a budget deficit is regarded as the most inflationary way of meeting it.
    2. A decrease in money circulation helps in controlling inflation.
    3. Excessive reduction of interest rates by the central bank reduces liquidity and eases inflationary pressure.
    Which of the statements given above is/are correct?

    1. A1 and 2 only
    2. B2 and 3 only
    3. C1 and 3 only
    4. D1, 2 and 3
17. 17.

    Consider the following statements about cost-push inflation:
    1. Higher wages paid to workers can raise production costs and set it off.
    2. A spike in oil prices can start it by raising the costs of transportation and production.
    3. Supply chain disruptions caused by natural disasters or pandemics cannot give rise to it, because they affect only the availability of goods and not their prices.
    4. A monopoly situation in a market can be one of its causes.
    How many of the above statements are correct?

    1. AOnly one
    2. BOnly two
    3. COnly three
    4. DAll four
18. 18.

    If inflation was low in the base year, which one of the following is likely to be seen in the inflation rate for the current year?

    1. AThe same rise in prices will show up as a lower inflation rate than in the base year
    2. BThe index number of the base year will fall below 100 to reflect the low inflation
    3. CThe weights of the basket will be revised automatically to match the lower price level
    4. DA smaller increase in prices can show up as a higher inflation rate for the current year
19. 19.

    As of October 2026, with reference to the Consumer Price Index (CPI) in India, consider the following statements:
    1. It measures the change in the prices paid by ultimate consumers in the retail market.
    2. It includes the impact of indirect taxes.
    3. The Consumer Price Index for Agricultural Labourers (CPI-AL) still has 1986-87 as its base year.
    Which of the statements given above is/are correct?

    1. A1 and 2 only
    2. B2 and 3 only
    3. C1 and 3 only
    4. D1, 2 and 3
20. 20.

    Consider the following pairs:

    Anti-inflation measure	Impact
    1. Increase in Bank Rate	Makes borrowing cheaper and expands credit creation
    2. Open market operations	Controls liquidity in the economy
    3. Price controls	Short-term relief, but may distort markets

    Which of the pairs given above is/are correctly matched?

    1. A1 and 2 only
    2. B2 and 3 only
    3. C1 and 3 only
    4. D1, 2 and 3
21. 21.

    Match List I with List II:

    List I (Term)	List II (Description)
    A. Stagflation	1. Demand falls short of the economy's potential output, leading to reduced prices and economic stagnation
    B. Depression	2. Demand for goods and services exceeds the economy's production capacity, putting upward pressure on prices
    C. Inflationary gap	3. A prolonged downturn lasting several years, with high unemployment, low consumer demand and reduced industrial production
    D. Deflationary gap	4. Inflation alongside a stagnant economy, with high unemployment and slow economic growth

    Select the correct answer using the code given below:

    1. AA-3, B-4, C-2, D-1
    2. BA-4, B-3, C-1, D-2
    3. CA-4, B-2, C-3, D-1
    4. DA-4, B-3, C-2, D-1
22. 22.

    With reference to the GDP deflator in India, consider the following statements:
    1. It is also known as the implicit price deflator.
    2. It covers the prices of goods only and not of services.
    3. It does not include the prices of imported goods.
    Which of the statements given above is/are correct?

    1. A1 and 2 only
    2. B2 and 3 only
    3. C1 and 3 only
    4. D1, 2 and 3
23. 23.

    Consider the following statements about deflation:
    1. It can be caused by a decrease in government, personal or investment spending.
    2. It is often caused by an expansion in the supply of money.
    3. It is the opposite of inflation and means a decline in the general level of prices.
    Which of the statements given above is/are correct?

    1. A1 only
    2. B2 only
    3. C1 and 2 only
    4. D1 and 3 only
24. 24.

    As of October 2026, consider the following statements about producer price indices in India:
    1. India compiles an Output PPI, a trial Input PPI confined to manufacturing, and Service PPIs.
    2. Service PPIs are compiled for all services in the economy.
    3. The WPI was stopped as soon as the PPI was introduced, with no period of parallel release.
    4. Banking and telecom are among the services covered by Service PPIs.
    How many of the above statements are correct?

    1. AOnly one
    2. BOnly two
    3. COnly three
    4. DAll four
25. 25.

    A price index is taken as 100 in the base year 2010. Inflation is 10 per cent in 2011 and 5 per cent in 2012. Which one of the following gives the index number for 2012 and the reason?

    1. A115, because the two inflation rates are added to the base index of 100
    2. B105, because only the latest year's inflation is added to the base index of 100
    3. C110.5, because the 5 per cent rise is applied only to the rise of the first year
    4. D115.5, because the 5 per cent rise is applied to the index number of the previous year

1. 1.

   UPSC 2021

   Which one of the following is likely to be the most inflationary in its effects?

   1. ARepayment of public debt
   2. BBorrowing from the public to finance a budget deficit
   3. CBorrowing from the banks to finance a budget deficit
   4. DCreation of new money to finance a budget deficit
2. 2.

   UPSC 2013

   Which one of the following is likely to be the most inflationary in its effect?

   1. ARepayment of public debt
   2. BBorrowing from the public to finance a budget deficit
   3. CBorrowing from banks to finance a budget deficit
   4. DCreating new money to finance a budget deficit
3. 3.

   UPSC 2021

   With reference to Indian economy, demand-pull inflation can be caused/increased by which of the following?
   1. Expansionary policies
   2. Fiscal stimulus
   3. Inflation-indexing wages
   4. Higher purchasing power
   5. Rising interest rates
   Select the correct answer using the code given below.

   1. A1, 2 and 4 only
   2. B3, 4 and 5 only
   3. C1, 2, 3 and 5 only
   4. D1, 2, 3, 4 and 5
4. 4.

   UPSC 2020

   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 ?

   1. A1 and 2 only
   2. B2 only
   3. C3 only
   4. D1, 2 and 3
5. 5.

   UPSC 2015

   Which of the following brings out the ‘Consumer Price Index Number for Industrial Workers’?

   1. AThe Reserve Bank of India
   2. BThe Department of Economic Affairs
   3. CThe Labour Bureau
   4. DThe Department of Personnel and Training
6. 6.

   UPSC 2015

   With reference to inflation in India, which of the following statements is correct?

   1. AControlling the inflation in India is the responsibility of the Government of India only
   2. BThe Reserve Bank of India has no role in controlling the inflation
   3. CDecreased money circulation helps in controlling the inflation
   4. DIncreased money circulation helps in controlling the inflation
7. 7.

   UPSC 2013

   Consider the following statements :
   1. Inflation benefits the debtors.
   2. Inflation benefits the bond-holders.
   Which of the statements given above is/are correct?

   1. A1 only
   2. B2 only
   3. CBoth 1 and 2
   4. DNeither 1 nor 2
8. 8.

   UPSC 2013

   A rise in general level of prices may be caused by
   1. An increase in the money supply
   2. A decrease in the aggregate level of output
   3. An increase in the effective demand
   Select the correct answer using the codes given below.

   1. A1 only
   2. B1 and 2 only
   3. C2 and 3 only
   4. D1, 2 and 3
9. 9.

   UPSC 2011

   India has experienced persistent and high food inflation in the recent past. What could be the reasons?
   1. Due to a gradual switchover to the cultivation of commercial crops, the area under the cultivation of food grains has steadily decreased in the last five years by about 30%.
   2. As a consequence of increasing incomes, the consumption patterns of the people have undergone a significant change.
   3. The food supply chain has structural constraints.
   Which of the statements given above are correct?

   1. A1 and 2 only
   2. B2 and 3 only
   3. C1 and 3 only
   4. D1, 2 and 3
10. 10.

    UPSC 2011

    A rapid increase in the rate of inflation is sometimes attributed to the "base effect". What is "base effect" ?

    1. AIt is the impact of drastic deficiency in supply due to failure of crops
    2. BIt is the impact of the surge in demand due to rapid economic growth
    3. CIt is the impact of the price levels of previous year on the calculation of inflation rate
    4. DNone of the statements (a), (b) and (c) given above is correct in this context
11. 11.

    UPSC 2011

    Economic growth is usually coupled with

    1. ADeflation
    2. BInflation
    3. CStagflation
    4. DHyperinflation
12. 12.

    UPSC 2010

    Which one of the following statements is an appropriate description of deflation ?

    1. AIt is a sudden fall in the value of a currency against other currencies
    2. BIt is a persistent recession in both the financial and real sectors of economy
    3. CIt is a persistent fall in the general price level of goods and services
    4. DIt is a fall in the rate of inflation over a period of time
13. 13.

    UPSC 2010

    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?

    1. A1 only
    2. B2 only
    3. CBoth 1 and 2
    4. DNeither 1 nor 2
14. 14.

    UPSC 2002

    With reference to the Wholesale Price Index (WPI), consider the following statements:
    1. The new WPI series with base 1993-94 = 100 became effective from April 1998.
    2. In the new WPI series, the weight for primary articles has gone down by 10 points.
    3. The weight for electricity has increased in the new WPI series.
    Which of these statements are correct?

    1. A1, 2 and 3
    2. B2 and 3
    3. C1 and 3
    4. D1 and 2
15. 15.

    UPSC 2001

    The new series of Wholesale Price Index (WPI) released by the Government of India is with reference to the base prices of

    1. A1981-82
    2. B1990-91
    3. C1993-94
    4. D1994-95
16. 16.

    UPSC 2000

    Match List I with List II and select the correct answer using the codes given below the Lists:
    List I
    I. Boom
    II. Recession
    III. Depression
    IV. Recovery
    List II A) Business activity at high level with increasing income, output and employment at macro level B) Gradual fall of income, output and employment with business activity in a low gear C) Unprecedented level of under employment and unemployment, drastic fall in income, output and employment D) Steady rise in the general level of prices, income, output and employment
    Codes:

    1. AI-A, II-B, III-C, IV-D
    2. BI-A, II-B, III-D, IV-C
    3. CI-B, II-A, III-D, IV-C
    4. DI-B, II-A, III-C, IV-D
17. 17.

    UPSC 1998

    The supply-side economics lays greater emphasis on the point of view of the

    1. Aproducer
    2. Bglobal economy
    3. Cconsumer
    4. Dmiddle-man
18. 18.

    UPSC 1998

    The current price index (base 1960) is nearly 330. This means that

    1. Aall items cost 3.3 times more than what they did in 1960
    2. Bthe prices of certain selected items have gone up to 3.3 times
    3. Cweighted mean of prices of certain items has increased 3.3 times
    4. Dgold price has gone up 3.3 times
19. 19.

    UPSC 1997

    In India, inflation is measured by the

    1. AWholesale Price Index Number
    2. BConsumers Price Index for urban non-manual workers
    3. CConsumers Price Index for agricultural workers
    4. DNational Income deflation