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Consider the following statements regarding Wholesale Price Index (WPI) and Consumer Price Index(CPI).
1. WPI pertains to only goods, not services.
2. WPI captures the average movement of wholesale prices of goods and is primarily used as a GDP deflator.
3. WPI has a higher weight of manufactured goods and the CPI has a greater constitution of food items.
4. RBI considers WPI as the main metric for the purpose of setting monetary policy.
Which of the above statements is/are correct?
- a)1, 2, 3
- b)1, 3
- c)1, 3, 4
- d)2, 3, 4
Correct answer is option 'A'. Can you explain this answer?
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Verified Answer
Consider the following statements regarding Wholesale Price Index (WPI...
While the Consumer Price Index-based retail inflation — the more widely tracked policy tool — looks at the price at which the consumer buys goods, the WPI tracks prices at the wholesale, or factory gate/mandi levels. Between the wholesale price and the retail price, the difference essentially is the former only tracks basic prices devoid of transportation cost, taxes and the retail margin etc. And that WPI pertains to only goods, not services.
So, the WPI basically captures the average movement of wholesale prices of goods and is primarily used as a GDP deflator (the ratio of the value of goods an economy produces in a particular year at current prices to that of prices that prevailed during the base year).
In recent years, the WPI and CPI have shown a degree of dissonance, given that the WPI has a higher weight of manufactured goods and the CPI has a greater constitution of food items.
WPI numbers are not the RBI’s main metric for the purpose of setting monetary policy.
Most Upvoted Answer
Consider the following statements regarding Wholesale Price Index (WPI...
Explanation:
WPI and CPI are two important indices used to measure inflation in an economy. Let's break down the given statements one by one:
1. WPI pertains to only goods, not services:
- This statement is correct. WPI measures the average change in the selling prices received by producers for their goods only and does not include services.
2. WPI captures the average movement of wholesale prices of goods and is primarily used as a GDP deflator:
- This statement is also correct. WPI tracks the changes in the wholesale prices of goods at various stages of production and distribution. It is commonly used as a GDP deflator to adjust nominal GDP for inflation.
3. WPI has a higher weight of manufactured goods and the CPI has a greater constitution of food items:
- This statement is correct. WPI gives more weight to manufactured goods, while CPI includes a higher proportion of food items in its basket of goods and services.
4. RBI considers WPI as the main metric for the purpose of setting monetary policy:
- This statement is incorrect. While the RBI does monitor WPI data, it primarily uses CPI as the main metric for setting monetary policy as it reflects changes in retail prices that directly impact consumers.
Therefore, the correct statements are 1, 2, and 3.
WPI and CPI are two important indices used to measure inflation in an economy. Let's break down the given statements one by one:
1. WPI pertains to only goods, not services:
- This statement is correct. WPI measures the average change in the selling prices received by producers for their goods only and does not include services.
2. WPI captures the average movement of wholesale prices of goods and is primarily used as a GDP deflator:
- This statement is also correct. WPI tracks the changes in the wholesale prices of goods at various stages of production and distribution. It is commonly used as a GDP deflator to adjust nominal GDP for inflation.
3. WPI has a higher weight of manufactured goods and the CPI has a greater constitution of food items:
- This statement is correct. WPI gives more weight to manufactured goods, while CPI includes a higher proportion of food items in its basket of goods and services.
4. RBI considers WPI as the main metric for the purpose of setting monetary policy:
- This statement is incorrect. While the RBI does monitor WPI data, it primarily uses CPI as the main metric for setting monetary policy as it reflects changes in retail prices that directly impact consumers.
Therefore, the correct statements are 1, 2, and 3.
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Consider the following statements regarding Wholesale Price Index (WPI) and Consumer Price Index(CPI).1. WPI pertains to only goods, not services.2. WPI captures the average movement of wholesale prices of goods and is primarily used as a GDP deflator.3. WPI has a higher weight of manufactured goods and the CPI has a greater constitution of food items.4. RBI considers WPI as the main metric for the purpose of setting monetary policy.Which of the above statements is/are correct?a)1, 2, 3b)1, 3c)1, 3, 4d)2, 3, 4Correct answer is option 'A'. Can you explain this answer?
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Consider the following statements regarding Wholesale Price Index (WPI) and Consumer Price Index(CPI).1. WPI pertains to only goods, not services.2. WPI captures the average movement of wholesale prices of goods and is primarily used as a GDP deflator.3. WPI has a higher weight of manufactured goods and the CPI has a greater constitution of food items.4. RBI considers WPI as the main metric for the purpose of setting monetary policy.Which of the above statements is/are correct?a)1, 2, 3b)1, 3c)1, 3, 4d)2, 3, 4Correct answer is option 'A'. Can you explain this answer? for Current Affairs 2024 is part of Current Affairs preparation. The Question and answers have been prepared according to the Current Affairs exam syllabus. Information about Consider the following statements regarding Wholesale Price Index (WPI) and Consumer Price Index(CPI).1. WPI pertains to only goods, not services.2. WPI captures the average movement of wholesale prices of goods and is primarily used as a GDP deflator.3. WPI has a higher weight of manufactured goods and the CPI has a greater constitution of food items.4. RBI considers WPI as the main metric for the purpose of setting monetary policy.Which of the above statements is/are correct?a)1, 2, 3b)1, 3c)1, 3, 4d)2, 3, 4Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for Current Affairs 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Wholesale Price Index (WPI) and Consumer Price Index(CPI).1. WPI pertains to only goods, not services.2. WPI captures the average movement of wholesale prices of goods and is primarily used as a GDP deflator.3. WPI has a higher weight of manufactured goods and the CPI has a greater constitution of food items.4. RBI considers WPI as the main metric for the purpose of setting monetary policy.Which of the above statements is/are correct?a)1, 2, 3b)1, 3c)1, 3, 4d)2, 3, 4Correct answer is option 'A'. Can you explain this answer?.
Consider the following statements regarding Wholesale Price Index (WPI) and Consumer Price Index(CPI).1. WPI pertains to only goods, not services.2. WPI captures the average movement of wholesale prices of goods and is primarily used as a GDP deflator.3. WPI has a higher weight of manufactured goods and the CPI has a greater constitution of food items.4. RBI considers WPI as the main metric for the purpose of setting monetary policy.Which of the above statements is/are correct?a)1, 2, 3b)1, 3c)1, 3, 4d)2, 3, 4Correct answer is option 'A'. Can you explain this answer? for Current Affairs 2024 is part of Current Affairs preparation. The Question and answers have been prepared according to the Current Affairs exam syllabus. Information about Consider the following statements regarding Wholesale Price Index (WPI) and Consumer Price Index(CPI).1. WPI pertains to only goods, not services.2. WPI captures the average movement of wholesale prices of goods and is primarily used as a GDP deflator.3. WPI has a higher weight of manufactured goods and the CPI has a greater constitution of food items.4. RBI considers WPI as the main metric for the purpose of setting monetary policy.Which of the above statements is/are correct?a)1, 2, 3b)1, 3c)1, 3, 4d)2, 3, 4Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for Current Affairs 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Wholesale Price Index (WPI) and Consumer Price Index(CPI).1. WPI pertains to only goods, not services.2. WPI captures the average movement of wholesale prices of goods and is primarily used as a GDP deflator.3. WPI has a higher weight of manufactured goods and the CPI has a greater constitution of food items.4. RBI considers WPI as the main metric for the purpose of setting monetary policy.Which of the above statements is/are correct?a)1, 2, 3b)1, 3c)1, 3, 4d)2, 3, 4Correct answer is option 'A'. Can you explain this answer?.
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