| Consider the following statements about the measurement of the Inflation |
| 1. Prices of the items of particular sets are compared to prices of items of five year ago. |
| 2. Inflation is measured based on the Consumer Price Index (CPI) which measures the change in prices of a selection of goods at retail rates. |
| Which of the statements given above is/are correct? |
A) Only 1
B) Only 2
C) Both 1 and 2
D) neither 1 nor 2
Correct Answer: D
Solution :
[d] The Reserve Bank of India (RBI) Governor, Raghuram Rajan, in April 2014, said that the central bank had adopted the new Consumer Price Index (CPI) (combined) as the key measure of inflation. Earlier, RBI had given more weightage to Wholesale Price Index (WPI) than CPI as the key measure of inflation for all policy purposes.
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