Economic Awareness - Sectors of Indian Economy
Which inflation measure is most useful for RBI to assess persistent inflation trends?
Which inflation measure is most useful for RBI to assess persistent inflation trends?
easy Q2 of 15
Step-by-Step Solution
Step 1: Understand RBI's inflation focus
RBI prefers inflation measures that reflect underlying persistent trends for policy decisions.Step 2: Identify the suitable inflation measure
Core inflation excludes volatile items, making it more reliable for assessing persistent inflation.Final Answer:
Core inflation excluding volatile items → Option DQuick Check:
RBI inflation focus = core inflation excluding volatile items ✅
Quick Trick: Core inflation guides RBI policy better than headline inflation.
Common Mistakes:
- Assuming headline inflation is always best for policy decisions.
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