PRELIMS मतलब MAD

Answer: D

Explanation:
The WPI is released by the Office of the Economic Adviser, Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, and not by the Department of Economic Affairs. Hence, Statement 1 is incorrect.

WPI primarily measures changes in wholesale prices of goods and does not include services in its coverage. Hence, Statement 2 is correct.

WPI is also an important indicator for monitoring price movements in different commodity groups and is useful for economic analysis, forecasting and policy assessment. Hence, Statement 3 is correct.

Therefore, Option D is the correct answer.

Answer: C

Explanation:
International trade is largely settled in widely accepted currencies such as the US dollar. Greater use of the Indian Rupee for trade settlement can reduce India’s dependence on the dollar and limit exposure to dollar-related exchange-rate risks. Hence, Statement 1 is correct.

Rupee-based settlement does not necessarily cause a sharp fall in India’s forex reserves. In fact, if fewer transactions require payment in foreign currencies, the demand for such currencies may decline. Therefore, Statement 2 is incorrect.

Countries facing shortages of dollars or other convertible currencies may find it difficult to finance imports. A Rupee-based settlement mechanism can provide an alternative channel for trade with India and may consequently support Indian exports to such economies. Hence, Statement 3 is correct.

Therefore, Option C is the correct answer.

Answer: D

Explanation:
India’s capital expenditure has not followed a declining trajectory. On the contrary, government capital spending has generally been given increasing emphasis in recent years. Hence, Statement 1 is incorrect.

GST collections have shown a broad upward trend, but describing the rise as completely uninterrupted is too absolute. Collections can fluctuate across periods depending on economic activity, compliance, seasonality and other factors. Hence, Statement 2 is also incorrect.

Therefore, Option D is the correct answer.

Answer: B

Explanation:
When the US Federal Reserve raises interest rates, dollar-denominated assets may become relatively more attractive. Capital may move towards the US, increasing demand for dollars and putting depreciation pressure on the Rupee. Hence, Statement 1 is correct.

Strong economic growth accompanied by rising forex reserves would generally support confidence in the economy and provide the RBI with a larger buffer against external volatility. Hence, Statement 2 is incorrect.

A widening trade deficit raises the demand for foreign currency to finance imports, while weaker foreign investment reduces foreign-currency inflows. Together, these factors can weaken the Rupee. Hence, Statement 3 is correct.

Persistently high domestic inflation can erode the Rupee’s purchasing power and affect the competitiveness of Indian goods, creating depreciation pressure over time. Hence, Statement 4 is correct.

Therefore, Option B is the correct answer.

Answer: A

Explanation:
A reduction in government expenditure can lower aggregate demand and therefore reduce inflationary pressure. Hence, Option B is incorrect.

Higher interest rates generally make borrowing more expensive, discourage consumption and investment, and are commonly used by central banks to control inflation. Hence, Option C is incorrect.

Lower production costs can allow firms to supply goods and services at lower prices and therefore tend to reduce cost-push inflation. Hence, Option D is incorrect.

An expansion in the money supply, when accompanied by stronger economic activity and rising demand, can increase overall spending in the economy. If aggregate demand grows faster than the economy’s ability to produce goods and services, prices may rise, creating inflationary pressure. Hence, Option A is correct.