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Consider the following statements:
1. The weightage of food in Consumer Price Index (CPI) is higher than that 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.
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:
- a)1 and 2 only
- b)2 only
- c)3 only
- d)1, 2 and 3
Correct answer is option 'A'. Can you explain this answer?
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Verified Answer
Consider the following statements:1. The weightage of food in Consumer...
WPI is the price of representative basket of wholesale goods. While the CPI is a comprehensive measure, used for estimation of price changes in a basket of goods and services representative of consumption expenditure in an economy. Food weight in WPI is 18.8% which part of primary products, While CPI has 50% weight for food. So statement 1 is correct.
So statement 2 is correct. The Reserve Bank of India (RBI) Governor in 2014 adopted the new Consumer Price Index (CPI) (combined) as the key measure of inflation. Based on the recommendations of Urjit Patel Committee. So statement 3 is not correct.
Therefore, the correct answer is (a).
So statement 2 is correct. The Reserve Bank of India (RBI) Governor in 2014 adopted the new Consumer Price Index (CPI) (combined) as the key measure of inflation. Based on the recommendations of Urjit Patel Committee. So statement 3 is not correct.
Therefore, the correct answer is (a).
Most Upvoted Answer
Consider the following statements:1. The weightage of food in Consumer...
Explanation:
- Weightage of food in CPI and WPI:
- CPI: Consumer Price Index is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. It includes food, beverages, housing, clothing, transportation, medical care, recreation, education, communication, and other items.
- WPI: Wholesale Price Index is a measure that tracks the changes in the prices of goods traded in bulk at the level of early-stage production, such as raw materials and intermediate goods.
- The weightage of food in CPI is higher than that in WPI. This is because food items have a higher share in the consumption basket of households than in the production basket of firms.
- WPI and CPI capturing different aspects of inflation:
- WPI does not capture changes in the prices of services, which CPI does. This is because WPI tracks the prices of goods traded in bulk at the level of early-stage production, such as raw materials and intermediate goods, whereas CPI tracks the prices paid by urban consumers for a market basket of consumer goods and services.
- Therefore, CPI is considered to be a more comprehensive measure of inflation than WPI because it includes both goods and services that are consumed by households.
- RBI adopting WPI as its key measure of inflation:
- Reserve Bank of India (RBI) has not adopted WPI as its key measure of inflation and to decide on changing the key policy rates. This statement is incorrect.
- RBI uses CPI (Combined) as the key measure of inflation for monetary policy purposes. This is because CPI (Combined) captures the inflation experienced by both rural and urban households, and it is used to set the target for the nominal anchor of monetary policy in India.
Therefore, the correct option is (a) 1 and 2 only.
- Weightage of food in CPI and WPI:
- CPI: Consumer Price Index is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. It includes food, beverages, housing, clothing, transportation, medical care, recreation, education, communication, and other items.
- WPI: Wholesale Price Index is a measure that tracks the changes in the prices of goods traded in bulk at the level of early-stage production, such as raw materials and intermediate goods.
- The weightage of food in CPI is higher than that in WPI. This is because food items have a higher share in the consumption basket of households than in the production basket of firms.
- WPI and CPI capturing different aspects of inflation:
- WPI does not capture changes in the prices of services, which CPI does. This is because WPI tracks the prices of goods traded in bulk at the level of early-stage production, such as raw materials and intermediate goods, whereas CPI tracks the prices paid by urban consumers for a market basket of consumer goods and services.
- Therefore, CPI is considered to be a more comprehensive measure of inflation than WPI because it includes both goods and services that are consumed by households.
- RBI adopting WPI as its key measure of inflation:
- Reserve Bank of India (RBI) has not adopted WPI as its key measure of inflation and to decide on changing the key policy rates. This statement is incorrect.
- RBI uses CPI (Combined) as the key measure of inflation for monetary policy purposes. This is because CPI (Combined) captures the inflation experienced by both rural and urban households, and it is used to set the target for the nominal anchor of monetary policy in India.
Therefore, the correct option is (a) 1 and 2 only.
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Consider the following statements:1. The weightage of food in Consumer Price Index (CPI) is higher than that 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:a)1 and 2 onlyb)2 onlyc)3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer?
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Consider the following statements:1. The weightage of food in Consumer Price Index (CPI) is higher than that 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:a)1 and 2 onlyb)2 onlyc)3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements:1. The weightage of food in Consumer Price Index (CPI) is higher than that 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:a)1 and 2 onlyb)2 onlyc)3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements:1. The weightage of food in Consumer Price Index (CPI) is higher than that 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:a)1 and 2 onlyb)2 onlyc)3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer?.
Consider the following statements:1. The weightage of food in Consumer Price Index (CPI) is higher than that 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:a)1 and 2 onlyb)2 onlyc)3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements:1. The weightage of food in Consumer Price Index (CPI) is higher than that 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:a)1 and 2 onlyb)2 onlyc)3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements:1. The weightage of food in Consumer Price Index (CPI) is higher than that 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:a)1 and 2 onlyb)2 onlyc)3 onlyd)1, 2 and 3Correct answer is option 'A'. Can you explain this answer?.
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