The inflation target the central government sets for the Reserve Bank is expressed in terms of which index?

The Wholesale Price IndexCorrect answerYour answerThe Index of Industrial ProductionCorrect answerYour answerThe GDP deflatorCorrect answerYour answerThe Consumer Price Index (Combined)Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer D

Correct answer: D

Under the flexible inflation targeting framework the target is four per cent, with a tolerance band of two percentage points either side.
It is written against the Consumer Price Index (Combined), which covers rural and urban India together.
The Wholesale Price Index is a different series with no services in it at all, and is not the target.

Worth noting

The target is set by the government in consultation with the RBI, not by the RBI itself, and is notified for a five-year period.

Concept: The index the inflation target is written against
Typical timeTypical: 40 s
Your timeYours: —

The rule this testsThe Reserve Bank and monetary policy

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Ten questions from Indian Economy & Institutions, at your own pace.

The inflation target the central government sets for the Reserve Bank is expressed in terms of which index?

Explanation