{"id":13378,"date":"2025-09-30T10:36:23","date_gmt":"2025-09-30T09:36:23","guid":{"rendered":"https:\/\/mcqsadda.com\/?p=13378"},"modified":"2025-10-24T05:38:47","modified_gmt":"2025-10-24T04:38:47","slug":"inflation-top-100-mcqs-with-answer-and-explanation","status":"publish","type":"post","link":"https:\/\/mcqsadda.com\/index.php\/2025\/09\/30\/inflation-top-100-mcqs-with-answer-and-explanation\/","title":{"rendered":"Inflation\u00a0Top 100 MCQs With Answer and Explanation"},"content":{"rendered":"\n

1. Inflation refers to:<\/mark><\/strong>
A) Continuous rise in prices of all goods and services
B) Fall in prices of essential commodities
C) Rise in money supply only
D) Rise in production of goods
Answer: A<\/strong>
Explanation:<\/strong> Inflation = sustained rise in general price level<\/strong> over time.<\/p>\n\n\n\n

2. Which of the following is NOT a type of inflation?<\/mark><\/strong>
A) Creeping inflation
B) Walking inflation
C) Running inflation
D) Falling inflation
Answer: D<\/strong>
Explanation:<\/strong> Falling inflation is called deflation<\/strong>, not a type of inflation.<\/p>\n\n\n\n

3. Creeping inflation refers to price rise of:<\/mark><\/strong>
A) Less than 3% per year
B) 3\u201310% per year
C) 10\u201320% per year
D) More than 20% per year
Answer: A<\/strong>
Explanation:<\/strong> Creeping inflation = mild inflation (<3%)<\/strong>.<\/p>\n\n\n\n

4. Walking inflation refers to price rise of:<\/mark><\/strong>
A) < 3%
B) 3\u201310%
C) 10\u201320%
D) > 20%
Answer: B<\/strong>
Explanation:<\/strong> Walking (moderate) inflation = 3\u201310% annually<\/strong>.<\/p>\n\n\n\n

5. Running inflation refers to price rise of:<\/mark><\/strong>
A) 10\u201320%
B) > 50%
C) < 3%
D) 3\u201310%
Answer: A<\/strong>
Explanation:<\/strong> Running inflation = 10\u201320% annual rise<\/strong>.<\/p>\n\n\n\n

6. Galloping or Hyperinflation refers to:<\/mark><\/strong>
A) Mild price rise
B) Sudden fall in prices
C) Extremely high price rise (> 50% annually)
D) Negative inflation
Answer: C<\/strong>
Explanation:<\/strong> Hyperinflation = extreme inflation (50%+ per year, often per month in history)<\/strong>.<\/p>\n\n\n\n

7. Deflation means:<\/mark><\/strong>
A) Increase in money supply
B) Continuous fall in general price level
C) Zero inflation
D) Mild inflation
Answer: B<\/strong>
Explanation:<\/strong> Deflation = persistent fall in prices<\/strong>.<\/p>\n\n\n\n

8. Disinflation refers to:<\/mark><\/strong>
A) Negative inflation
B) Fall in rate of inflation, but inflation still positive
C) Rapid increase in prices
D) Hyperinflation
Answer: B<\/strong>
Explanation:<\/strong> Disinflation = slowdown in inflation rate (e.g., 8% \u2192 5%).<\/p>\n\n\n\n

9. Stagflation means:<\/mark><\/strong>
A) Inflation + High growth
B) Inflation + Unemployment + Stagnation
C) Deflation + High growth
D) Only inflation without growth
Answer: B<\/strong>
Explanation:<\/strong> Stagflation = stagnant growth + inflation + unemployment<\/strong>.<\/p>\n\n\n\n

10. Reflation refers to:<\/mark><\/strong>
A) Inflation with depression
B) Policy to revive economy with mild inflation
C) Deflationary policy
D) High inflation during war
Answer: B<\/strong>
Explanation:<\/strong> Reflation = deliberate govt policy<\/strong> to raise prices moderately to overcome deflation.<\/p>\n\n\n\n

11. Core inflation excludes:<\/mark><\/strong>
A) Food and fuel prices
B) Manufactured goods
C) Taxes
D) Services
Answer: A<\/strong>
Explanation:<\/strong> Core inflation = headline inflation excluding food & energy<\/strong> (volatile items).<\/p>\n\n\n\n

12. Headline inflation includes:<\/mark><\/strong>
A) Only core goods
B) All items in CPI including food & fuel
C) Only wholesale goods
D) Only services
Answer: B<\/strong>
Explanation:<\/strong> Headline inflation = full CPI basket.<\/p>\n\n\n\n

13. Imported inflation is caused by:<\/mark><\/strong>
A) High domestic demand
B) High wages
C) Rise in import prices (oil, raw materials)
D) High money supply
Answer: C<\/strong>
Explanation:<\/strong> Imported inflation = inflation transmitted via higher import costs<\/strong>.<\/p>\n\n\n\n

14. Structural inflation is common in:<\/mark><\/strong>
A) Developed economies
B) Developing economies
C) Both equally
D) Only agricultural economies
Answer: B<\/strong>
Explanation:<\/strong> Structural inflation arises due to supply rigidities in developing countries<\/strong>.<\/p>\n\n\n\n

15. Which of the following is an inflationary gap?<\/mark><\/strong>
A) Excess supply over demand
B) Excess demand over supply at full employment
C) Excess imports over exports
D) Excess saving over investment
Answer: B<\/strong>
Explanation:<\/strong> Inflationary gap = excess demand at full employment<\/strong>.<\/p>\n\n\n\n

16. Demand-pull inflation is caused by:<\/mark><\/strong>
A) Increase in production cost
B) Increase in demand for goods & services
C) Decrease in money supply
D) Increase in unemployment
Answer: B<\/strong>
Explanation:<\/strong> Demand-pull inflation = too much money chasing too few goods<\/strong>.<\/p>\n\n\n\n

17. Cost-push inflation is caused by:<\/mark><\/strong>
A) Rise in wages, raw materials, fuel
B) Excess demand
C) Increased government spending
D) Higher exports
Answer: A<\/strong>
Explanation:<\/strong> Cost-push inflation arises due to rising production costs<\/strong>.<\/p>\n\n\n\n

18. Built-in inflation is also called:<\/mark><\/strong>
A) Demand-pull inflation
B) Cost-push inflation
C) Wage-price spiral inflation
D) Deflation
Answer: C<\/strong>
Explanation:<\/strong> Built-in inflation = wage\u2013price spiral<\/strong>.<\/p>\n\n\n\n

19. Which of the following groups suffers most during inflation?<\/mark><\/strong>
A) Debtors
B) Creditors
C) Businessmen
D) Farmers
Answer: B<\/strong>
Explanation:<\/strong> Creditors lose as money repaid has lower value<\/strong>.<\/p>\n\n\n\n

20. Which of the following benefits during inflation?<\/mark><\/strong>
A) Creditors
B) Debtors
C) Fixed income groups
D) Government servants
Answer: B<\/strong>
Explanation:<\/strong> Debtors gain \u2192 repay loans with cheaper money.<\/p>\n\n\n\n

21. Inflation reduces the purchasing power of:<\/mark><\/strong>
A) Money
B) Gold
C) Land
D) Shares
Answer: A<\/strong>
Explanation:<\/strong> Inflation erodes value of money<\/strong>.<\/p>\n\n\n\n

22. Inflation redistributes income in favor of:<\/mark><\/strong>
A) Wage earners
B) Fixed income groups
C) Debtors & business class
D) Salaried people
Answer: C<\/strong>
Explanation:<\/strong> Inflation helps debtors & businessmen<\/strong>, hurts fixed-income earners.<\/p>\n\n\n\n

23. Creeping inflation is sometimes considered:<\/mark><\/strong>
A) Dangerous
B) Beneficial for growth
C) Deflationary
D) Hyperinflation
Answer: B<\/strong>
Explanation:<\/strong> Mild inflation may stimulate investment<\/strong>.<\/p>\n\n\n\n

24. Which of the following is not an effect of inflation?<\/mark><\/strong>
A) Income redistribution
B) Balance of payment problems
C) Fall in purchasing power
D) Decrease in money supply
Answer: D<\/strong>
Explanation:<\/strong> Inflation is linked with increased money supply<\/strong>, not decrease.<\/p>\n\n\n\n

25. Which of the following describes \u201cHyperinflation\u201d correctly?<\/mark><\/strong>
A) 2\u20133% rise annually
B) 20\u201330% rise annually
C) Extremely rapid rise in prices (often per month)
D) Zero inflation
Answer: C<\/strong>
Explanation:<\/strong> Hyperinflation = prices spiral out of control<\/strong>, often >50% per month (e.g., Germany 1920s, Zimbabwe 2000s).<\/p>\n\n\n\n

26. According to Quantity Theory of Money (Fisher\u2019s equation), inflation occurs when:<\/mark><\/strong>
A) Money supply increases faster than output
B) Money supply decreases
C) Output increases faster than money supply
D) Velocity of money decreases
Answer: A<\/strong>
Explanation:<\/strong> Fisher\u2019s equation (MV = PT) \u2192 if money supply rises faster than goods, prices increase.<\/p>\n\n\n\n

27. Keynes believed inflation arises mainly due to:<\/mark><\/strong>
A) Excess money supply
B) Excess aggregate demand beyond full employment
C) Excess production
D) High imports
Answer: B<\/strong>
Explanation:<\/strong> Keynes: inflation begins when aggregate demand > aggregate supply at full employment<\/strong>.<\/p>\n\n\n\n

28. Demand-pull inflation is also called:<\/mark><\/strong>
A) Cost inflation
B) Excess demand inflation
C) Stagflation
D) Wage-price inflation
Answer: B<\/strong>
Explanation:<\/strong> Demand-pull = caused by excess demand<\/strong>.<\/p>\n\n\n\n

29. Cost-push inflation arises due to:<\/mark><\/strong>
A) High money supply
B) High government spending
C) Rising wages, fuel costs, raw materials
D) High exports
Answer: C<\/strong>
Explanation:<\/strong> Production costs \u2191 \u2192 producers raise prices.<\/p>\n\n\n\n

30. Wage-price spiral is an example of:<\/mark><\/strong>
A) Demand-pull inflation
B) Cost-push inflation
C) Built-in inflation
D) Deflation
Answer: C<\/strong>
Explanation:<\/strong> Wage hikes increase costs \u2192 prices rise \u2192 further wage demands.<\/p>\n\n\n\n

31. Which of the following can trigger inflation?<\/mark><\/strong>
A) Increase in government expenditure
B) Increase in money supply
C) Increase in exports
D) All of the above
Answer: D<\/strong>
Explanation:<\/strong> All can raise aggregate demand<\/strong>, fueling inflation.<\/p>\n\n\n\n

32. Which is a monetary cause of inflation?<\/mark><\/strong>
A) Increase in wages
B) Deficit financing
C) Supply bottlenecks
D) Natural calamities
Answer: B<\/strong>
Explanation:<\/strong> Printing money to finance deficits raises money supply \u2192 inflation.<\/p>\n\n\n\n

33. Which is a real cause of inflation?<\/mark><\/strong>
A) Increase in money supply
B) Shortage of goods due to drought
C) Expansion of bank credit
D) Deficit financing
Answer: B<\/strong>
Explanation:<\/strong> Real causes = supply-side shortages<\/strong>.<\/p>\n\n\n\n

34. According to monetarists, inflation is always and everywhere:<\/mark><\/strong>
A) A fiscal phenomenon
B) A real phenomenon
C) A monetary phenomenon
D) A social phenomenon
Answer: C<\/strong>
Explanation:<\/strong> Milton Friedman: \u201cInflation is always a monetary phenomenon.\u201d<\/p>\n\n\n\n

35. Structural inflation is explained by:<\/mark><\/strong>
A) Monetarists
B) Keynesians
C) Development economists
D) Classical economists
Answer: C<\/strong>
Explanation:<\/strong> Structuralists link inflation in developing countries to supply rigidities<\/strong>.<\/p>\n\n\n\n

36. Deficit financing by government leads to inflation because:<\/strong>
<\/mark>A) It reduces demand
B) It increases supply
C) It increases money supply without corresponding output
D) It reduces wages
Answer: C<\/strong>
Explanation:<\/strong> Printing currency raises demand > supply.<\/p>\n\n\n\n

37. Inflationary expectations among people may cause:<\/mark><\/strong>
A) Deflation
B) Fall in demand
C) Self-fulfilling inflation
D) Hyperinflation only
Answer: C<\/strong>
Explanation:<\/strong> Expectation of rising prices \u2192 people buy more now \u2192 prices actually rise.<\/p>\n\n\n\n

38. Which of the following is an external cause of inflation?<\/mark><\/strong>
A) Bad monsoon
B) Global oil price rise
C) Higher wages
D) Deficit financing
Answer: B<\/strong>
Explanation:<\/strong> Imported inflation = external factor<\/strong>.<\/p>\n\n\n\n

39. Cost-push inflation is associated with:<\/mark><\/strong>
A) Excess demand
B) Supply shocks
C) High investment
D) Deflation
Answer: B<\/strong>
Explanation:<\/strong> Supply shocks (oil, raw materials) \u2192 cost-push inflation.<\/p>\n\n\n\n

40. Which of the following is an example of demand-pull inflation?<\/mark><\/strong>
A) Sudden wage increase
B) Oil price shock
C) Higher government expenditure on infrastructure
D) Drought
Answer: C<\/strong>
Explanation:<\/strong> More govt spending \u2192 demand \u2191 \u2192 demand-pull inflation.<\/p>\n\n\n\n

41. Inflation due to hoarding and black marketing is:<\/mark><\/strong>
A) Demand-pull inflation
B) Cost-push inflation
C) Structural inflation
D) Reflation
Answer: B<\/strong>
Explanation:<\/strong> Hoarding reduces supply \u2192 price rise (cost-push).<\/p>\n\n\n\n

42. Which type of inflation occurs first in developing economies?<\/mark><\/strong>
A) Demand-pull inflation
B) Structural inflation
C) Cost-push inflation
D) Reflation
Answer: B<\/strong>
Explanation:<\/strong> Supply bottlenecks (agriculture, infrastructure) \u2192 structural inflation.<\/p>\n\n\n\n

43. When money supply grows faster than real output, it causes:<\/mark><\/strong>
A) Stagflation
B) Inflation
C) Deflation
D) Recession
Answer: B<\/strong>
Explanation:<\/strong> Excess liquidity leads to inflationary pressure<\/strong>.<\/p>\n\n\n\n

44. \u201cToo much money chasing too few goods\u201d refers to:<\/mark><\/strong>
A) Cost-push inflation
B) Demand-pull inflation
C) Stagflation
D) Deflation
Answer: B<\/strong>
Explanation:<\/strong> This phrase defines demand-pull inflation.<\/p>\n\n\n\n

45. Which of the following can reduce inflationary pressure?<\/mark><\/strong>
A) Increase in subsidies
B) Fall in government spending
C) Increase in money supply
D) Deficit financing
Answer: B<\/strong>
Explanation:<\/strong> Reducing govt expenditure reduces aggregate demand.<\/p>\n\n\n\n

46. Which theory of inflation focuses on supply rigidities?<\/mark><\/strong>
A) Monetarist theory
B) Keynesian theory
C) Structuralist theory
D) Classical theory
Answer: C<\/strong>
Explanation:<\/strong> Structuralist theory \u2192 bottlenecks in agriculture\/industry in developing nations.<\/p>\n\n\n\n

47. According to Keynes, mild inflation is:<\/mark><\/strong>
A) Always harmful
B) Always beneficial
C) Useful for stimulating growth
D) Irrelevant
Answer: C<\/strong>
Explanation:<\/strong> Keynes: mild inflation encourages investment & growth.<\/p>\n\n\n\n

48. Which of the following is a fiscal cause of inflation?<\/mark><\/strong>
A) Increase in bank credit
B) Increase in indirect taxes
C) Fall in imports
D) Increase in velocity of money
Answer: B<\/strong>
Explanation:<\/strong> Higher indirect taxes \u2192 higher costs \u2192 inflation.<\/p>\n\n\n\n

49. Inflationary gap is defined as:<\/mark><\/strong>
A) Excess of aggregate demand over aggregate supply at full employment
B) Excess of aggregate supply over aggregate demand
C) Excess imports over exports
D) Excess savings over investment
Answer: A<\/strong>
Explanation:<\/strong> Inflationary gap = demand > supply<\/strong> at full employment.<\/p>\n\n\n\n

50. Which of the following combinations best explains stagflation?<\/mark><\/strong>
A) Inflation + Rising output
B) Inflation + Unemployment + Stagnation
C) Inflation + High growth
D) Inflation + Deflation
Answer: B<\/strong>
Explanation:<\/strong> Stagflation = rising prices + unemployment + stagnant growth<\/strong>.<\/p>\n\n\n\n

51. Which of the following is the most common measure of inflation in India (official)?<\/mark><\/strong>
A) GDP Deflator
B) CPI (Consumer Price Index)
C) WPI (Wholesale Price Index)
D) Cost of Living Index
Answer: B<\/strong>
Explanation:<\/strong> Since 2011, CPI is the official measure<\/strong> of inflation in India.<\/p>\n\n\n\n

52. WPI inflation in India is published by:<\/mark><\/strong>
A) Ministry of Commerce & Industry
B) Ministry of Finance
C) RBI
D) NSO
Answer: A<\/strong>
Explanation:<\/strong> Office of the Economic Adviser, Ministry of Commerce & Industry<\/strong>, publishes WPI.<\/p>\n\n\n\n

53. CPI in India is compiled by:<\/mark><\/strong>
A) RBI
B) Ministry of Finance
C) National Statistical Office (NSO)
D) Planning Commission
Answer: C<\/strong>
Explanation:<\/strong> NSO under Ministry of Statistics & Programme Implementation<\/strong> compiles CPI.<\/p>\n\n\n\n

54. GDP deflator is calculated as:<\/mark><\/strong>
A) (Real GDP \u00f7 Nominal GDP) \u00d7 100
B) (Nominal GDP \u00f7 Real GDP) \u00d7 100
C) (GDP \u2013 NNP) \u00d7 100
D) (CPI \u00f7 WPI) \u00d7 100
Answer: B<\/strong>
Explanation:<\/strong> GDP deflator = (Nominal GDP \u00f7 Real GDP) \u00d7 100.<\/p>\n\n\n\n

55. Which inflation index covers both goods & services?<\/mark><\/strong>
A) CPI
B) WPI
C) GDP deflator
D) Both A and C
Answer: D<\/strong>
Explanation:<\/strong> CPI & GDP deflator<\/strong> include goods and services, WPI covers only goods.<\/p>\n\n\n\n

56. Base year of WPI in India (as of 2023) is:<\/mark><\/strong>
A) 2004\u201305
B) 2011\u201312
C) 2017\u201318
D) 2019\u201320
Answer: B<\/strong>
Explanation:<\/strong> Current WPI base year = 2011\u201312<\/strong>.<\/p>\n\n\n\n

57. Which is a broader measure of inflation?<\/mark><\/strong>
A) CPI
B) WPI
C) GDP deflator
D) Cost of Living Index
Answer: C<\/strong>
Explanation:<\/strong> GDP deflator covers all goods and services in GDP<\/strong>, hence broader.<\/p>\n\n\n\n

58. Which price index reflects cost of living most accurately?<\/mark><\/strong>
A) CPI
B) WPI
C) GDP deflator
D) NNP
Answer: A<\/strong>
Explanation:<\/strong> CPI is directly related to household consumption expenditure<\/strong>.<\/p>\n\n\n\n

59. Which inflation measure is used by RBI for Monetary Policy decisions?<\/mark><\/strong>
A) CPI Combined
B) WPI
C) GDP deflator
D) CPI for Industrial Workers
Answer: A<\/strong>
Explanation:<\/strong> RBI uses CPI (Combined)<\/strong> as target for inflation control.<\/p>\n\n\n\n

60. Which inflation measure includes primary, fuel, and manufactured products?<\/mark><\/strong>
A) CPI
B) WPI
C) GDP deflator
D) Cost of Living Index
Answer: B<\/strong>
Explanation:<\/strong> WPI in India = primary articles + fuel & power + manufactured goods<\/strong>.<\/p>\n\n\n\n

61. Which index is published monthly by Labour Bureau?<\/mark><\/strong>
A) CPI for Industrial Workers (CPI-IW)
B) CPI Combined
C) WPI
D) GDP deflator
Answer: A<\/strong>
Explanation:<\/strong> Labour Bureau releases CPI-IW & CPI-AL (Agricultural Labourers)<\/strong>.<\/p>\n\n\n\n

62. Which of the following is NOT a limitation of CPI in India?<\/mark><\/strong>
A) Time lag in data collection
B) Doesn\u2019t include rural consumption
C) Multiple series of CPI
D) Reflects household expenses
Answer: D<\/strong>
Explanation:<\/strong> CPI does reflect consumption; the rest are limitations.<\/p>\n\n\n\n

63. Which of the following is a monetary measure to control inflation?<\/mark><\/strong>
A) Increase in bank rate
B) Increase in CRR
C) Open market operations (selling securities)
D) All of the above
Answer: D<\/strong>
Explanation:<\/strong> All are contractionary monetary policies by RBI.<\/p>\n\n\n\n

64. Increasing Cash Reserve Ratio (CRR) helps in controlling inflation by:<\/mark><\/strong>
A) Increasing money supply
B) Reducing lending capacity of banks
C) Increasing government spending
D) Raising aggregate demand
Answer: B<\/strong>
Explanation:<\/strong> Higher CRR reduces bank liquidity \u2192 credit creation falls.<\/p>\n\n\n\n

65. Raising Repo Rate by RBI leads to:<\/mark><\/strong>
A) Cheaper loans
B) Costlier loans \u2192 reduced demand
C) No effect on inflation
D) More money supply
Answer: B<\/strong>
Explanation:<\/strong> Higher repo \u2192 banks borrow at higher cost \u2192 lending rates rise \u2192 inflation falls.<\/p>\n\n\n\n

66. Which of the following is a fiscal measure to control inflation?<\/mark><\/strong>
A) Reducing government expenditure
B) Increasing direct taxes
C) Reducing fiscal deficit
D) All of the above
Answer: D<\/strong>
Explanation:<\/strong> All fiscal tools help reduce aggregate demand.<\/p>\n\n\n\n

67. Supply-side measures to control inflation include:<\/mark><\/strong>
A) Importing essential goods
B) Improving transport & storage
C) Relaxing import duties
D) All of the above
Answer: D<\/strong>
Explanation:<\/strong> All measures help increase supply & reduce price pressure<\/strong>.<\/p>\n\n\n\n

68. Price control and rationing are examples of:<\/mark><\/strong>
A) Monetary measures
B) Fiscal measures
C) Direct control measures
D) Structural measures
Answer: C<\/strong>
Explanation:<\/strong> Direct controls fix maximum price & ration supply<\/strong>.<\/p>\n\n\n\n

69. Which institution in India is responsible for inflation targeting?<\/mark><\/strong>
A) Finance Ministry
B) RBI
C) NITI Aayog
D) Planning Commission
Answer: B<\/strong>
Explanation:<\/strong> RBI targets inflation through Monetary Policy Committee (MPC)<\/strong>.<\/p>\n\n\n\n

70. The inflation target set under India\u2019s flexible inflation targeting framework is:<\/mark><\/strong>
A) 2% \u00b1 1
B) 4% \u00b1 2
C) 6% \u00b1 3
D) 5% \u00b1 1
Answer: B<\/strong>
Explanation:<\/strong> RBI\u2019s target = 4% with \u00b12% band (2\u20136%)<\/strong>.<\/p>\n\n\n\n

71. Which Act amended RBI\u2019s role to adopt inflation targeting in India?<\/mark><\/strong>
A) RBI Act, 1934
B) FRBM Act, 2003
C) Banking Regulation Act, 1949
D) Companies Act, 2013
Answer: A<\/strong>
Explanation:<\/strong> The RBI Act, 1934<\/strong> was amended in 2016 for inflation targeting.<\/p>\n\n\n\n

72. Inflation control using demand management tools refers to:<\/mark><\/strong>
A) Monetary & fiscal policies
B) Price controls
C) Wage controls
D) Subsidies
Answer: A<\/strong>
Explanation:<\/strong> Demand management \u2192 controlling aggregate demand via monetary\/fiscal policy.<\/p>\n\n\n\n

73. If inflation is due to cost-push factors, the best remedy is:<\/mark><\/strong>
A) Monetary tightening
B) Fiscal tightening
C) Supply-side improvements
D) Decreasing CRR
Answer: C<\/strong>
Explanation:<\/strong> Cost-push inflation needs supply-side measures<\/strong>.<\/p>\n\n\n\n

74. Indexation of wages to inflation is called:<\/mark><\/strong>
A) Wage-price spiral
B) De-indexation
C) Inflation targeting
D) De-escalation clause
Answer: A<\/strong>
Explanation:<\/strong> Linking wages to inflation fuels wage-price spiral<\/strong>.<\/p>\n\n\n\n

75. A policy mix to control inflation usually involves:<\/mark><\/strong>
A) Only monetary policy
B) Only fiscal policy
C) Both monetary and fiscal measures
D) Neither monetary nor fiscal measures
Answer: C<\/strong>
Explanation:<\/strong> Effective inflation control requires coordination of monetary & fiscal policies<\/strong>.<\/p>\n\n\n\n

76. Which body sets India\u2019s inflation target?<\/mark><\/strong>
A) NITI Aayog
B) Monetary Policy Committee (MPC)
C) Finance Commission
D) Planning Commission
Answer: B<\/strong>
Explanation:<\/strong> The MPC under RBI<\/strong> sets and monitors inflation target.<\/p>\n\n\n\n

77. Current inflation target in India (till March 2026) is:<\/mark><\/strong>
A) 2% \u00b1 1
B) 4% \u00b1 2
C) 5% \u00b1 1
D) 6% \u00b1 3
Answer: B<\/strong>
Explanation:<\/strong> India follows Flexible Inflation Targeting (FIT)<\/strong>: 4% \u00b1 2% band (2\u20136%)<\/strong>.<\/p>\n\n\n\n

78. Who chairs the Monetary Policy Committee (MPC) of India?<\/mark><\/strong>
A) Finance Minister
B) RBI Governor
C) Prime Minister
D) Chief Economic Adviser
Answer: B<\/strong>
Explanation:<\/strong> RBI Governor is ex-officio Chairperson of MPC<\/strong>.<\/p>\n\n\n\n

79. High inflation accompanied by slow growth in India is called:<\/mark><\/strong>
A) Disinflation
B) Stagflation
C) Hyperinflation
D) Creeping inflation
Answer: B<\/strong>
Explanation:<\/strong> Inflation + stagnation + unemployment = stagflation<\/strong>.<\/p>\n\n\n\n

80. Which of the following fuels imported inflation in India?<\/mark><\/strong>
A) High MSP
B) Rising crude oil prices globally
C) Excess government borrowing
D) Increased wages
Answer: B<\/strong>
Explanation:<\/strong> India imports >80% of crude \u2192 oil price rise causes inflation<\/strong>.<\/p>\n\n\n\n

81. Food inflation in India is often due to:<\/mark><\/strong>
A) Supply bottlenecks
B) Hoarding & black marketing
C) Seasonal variation in agricultural output
D) All of the above
Answer: D<\/strong>
Explanation:<\/strong> Food inflation is driven by structural & seasonal factors<\/strong>.<\/p>\n\n\n\n

82. Which type of inflation was common in India during the 1970s oil shocks?<\/mark><\/strong>
A) Demand-pull inflation
B) Cost-push inflation
C) Hyperinflation
D) Reflation
Answer: B<\/strong>
Explanation:<\/strong> Oil crisis \u2192 cost-push inflation<\/strong>.<\/p>\n\n\n\n

83. Which index was earlier the main measure of inflation in India before CPI?<\/mark><\/strong>
A) GDP deflator
B) CPI-IW
C) WPI
D) Cost of Living Index
Answer: C<\/strong>
Explanation:<\/strong> WPI<\/strong> was India\u2019s main inflation measure till 2011.<\/p>\n\n\n\n

84. \u201cHeadline inflation\u201d in India is measured by:<\/mark><\/strong>
A) WPI
B) CPI Combined
C) GDP deflator
D) CPI-IW
Answer: B<\/strong>
Explanation:<\/strong> CPI Combined<\/strong> is India\u2019s official headline inflation indicator.<\/p>\n\n\n\n

85. Inflation hurts which group the most?<\/mark><\/strong>
A) Debtors
B) Businessmen
C) Fixed income groups
D) Farmers
Answer: C<\/strong>
Explanation:<\/strong> Salaried & pensioners suffer most as income doesn\u2019t rise with prices.<\/p>\n\n\n\n

86. Inflation benefits:<\/mark><\/strong>
A) Creditors
B) Debtors
C) Fixed wage earners
D) Consumers
Answer: B<\/strong>
Explanation:<\/strong> Debtors repay loans in cheaper money<\/strong>.<\/p>\n\n\n\n

87. In India, which fiscal tool is used to control inflation?<\/mark><\/strong>
A) Reduction in indirect taxes
B) Increase in government spending
C) Reduction in fiscal deficit
D) Printing more currency
Answer: C<\/strong>
Explanation:<\/strong> Cutting fiscal deficit<\/strong> lowers demand pressure.<\/p>\n\n\n\n

88. \u201cHeadline vs Core Inflation\u201d \u2013 Core inflation excludes:<\/mark><\/strong>
A) Manufactured goods
B) Fuel & food items
C) Services
D) Imports
Answer: B<\/strong>
Explanation:<\/strong> Core = inflation excluding food & fuel<\/strong> (volatile items).<\/p>\n\n\n\n

89. Which of the following reflects household inflation experience in India?<\/mark><\/strong>
A) WPI
B) CPI
C) GDP deflator
D) CRR
Answer: B<\/strong>
Explanation:<\/strong> CPI measures cost of living<\/strong>, directly relevant to households.<\/p>\n\n\n\n

90. During high inflation, RBI usually:<\/mark><\/strong>
A) Reduces repo rate
B) Increases repo rate
C) Reduces CRR
D) Expands money supply
Answer: B<\/strong>
Explanation:<\/strong> Higher repo rate \u2192 loans costlier \u2192 demand falls.<\/p>\n\n\n\n

91. Which of the following is a structural measure to control food inflation in India?<\/mark><\/strong>
A) Increasing subsidies
B) Investment in storage & cold chains
C) Reducing repo rate
D) Printing currency
Answer: B<\/strong>
Explanation:<\/strong> Better storage & distribution<\/strong> reduces wastage & seasonal inflation.<\/p>\n\n\n\n

92. Inflation in India is largely influenced by:<\/strong>
<\/mark>A) Oil prices & monsoon
B) Gold imports
C) Industrial productivity
D) Population growth
Answer: A<\/strong>
Explanation:<\/strong> Oil & agriculture (monsoon)<\/strong> are key drivers of Indian inflation.<\/p>\n\n\n\n

93. If CPI inflation > WPI inflation, it usually indicates:<\/mark><\/strong>
A) Industrial inflation
B) Food & services inflation
C) Deflation
D) Inflation in exports only
Answer: B<\/strong>
Explanation:<\/strong> CPI covers food & services<\/strong>, WPI excludes services.<\/p>\n\n\n\n

94. Which inflation measure is broader: CPI or GDP deflator?<\/mark><\/strong>
A) CPI
B) GDP deflator
C) Both equal
D) None
Answer: B<\/strong>
Explanation:<\/strong> GDP deflator includes all goods & services in GDP<\/strong>.<\/p>\n\n\n\n

95. Which is NOT an effect of persistent inflation in India?<\/mark><\/strong>
A) Rising inequality
B) Encouragement to savings
C) Decline in purchasing power
D) Capital flight
Answer: B<\/strong>
Explanation:<\/strong> Inflation discourages savings<\/strong> (real value falls).<\/p>\n\n\n\n

96. \u201cImported inflation\u201d in India mainly relates to:<\/mark><\/strong>
A) Electronics imports
B) Oil imports
C) Food imports
D) Arms imports
Answer: B<\/strong>
Explanation:<\/strong> Oil is the biggest source of imported inflation<\/strong>.<\/p>\n\n\n\n

97. Which committee recommended inflation targeting for India?<\/mark><\/strong>
A) Rangarajan Committee
B) Urjit Patel Committee (2014)
C) Narasimham Committee
D) Kelkar Committee
Answer: B<\/strong>
Explanation:<\/strong> Urjit Patel Committee<\/strong> recommended adopting inflation targeting.<\/p>\n\n\n\n

98. Inflation in India is officially targeted using:<\/mark><\/strong>
A) WPI
B) CPI Combined
C) CPI-IW
D) GDP deflator
Answer: B<\/strong>
Explanation:<\/strong> MPC targets CPI Combined<\/strong> inflation.<\/p>\n\n\n\n

99. Which of the following is an example of reflationary policy in India?<\/mark><\/strong>
A) Reducing repo rate during slowdown
B) Cutting government spending
C) Increasing CRR during boom
D) Selling govt securities
Answer: A<\/strong>
Explanation:<\/strong> Lower repo = cheap credit = revive demand<\/strong> in slowdown.<\/p>\n\n\n\n

100. India\u2019s flexible inflation targeting (FIT) framework was introduced in:<\/strong>
<\/mark>A) 2012
B) 2014
C) 2016
D) 2018
Answer: C<\/strong>
Explanation:<\/strong> FIT was adopted in 2016 by amending RBI Act, 1934<\/strong>.<\/p>\n\n\n","protected":false},"excerpt":{"rendered":"

1. Inflation refers to:A) Continuous rise in prices of all goods and servicesB) Fall in prices of essential commoditiesC) Rise in money supply onlyD) Rise in production of goodsAnswer: AExplanation: Inflation = sustained rise in general price level over time. 2. 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