Insta– QUED ( Questions from Editorials. ) 13 August 2021 – INSIGHTSIAS

Solution: d)

WPI reflects the change in average prices for bulk sale of commodities at the first stage of transaction while CPI reflects the average change in prices at retail level paid by the consumer.

The prices used for compilation of WPI are collected at ex-factory level for manufactured products, at ex-mine level for mineral products and mandi level for agricultural products. In contrast, retail prices applicable to consumers and collected from various markets are used to compile CPI.

The CPI basket consists of services like housing, education, medical care, recreation etc. which are not part of WPI basket. A significant proportion of WPI item basket represents manufacturing inputs and intermediate goods like minerals, basic metals, machinery etc. whose prices are influenced by global factors but these are not directly consumed by the households and are not part of the CPI item basket.

Thus even significant price movements in items included in WPI basket need not necessarily translate into movements in CPI in the short run. The rise or fall in prices at wholesale level spill over to the retail level after a lag.

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Solution: d)

‘Abraham Accords’ entered with the UAE and Bahrain are ‘peace-for-peace’ deals without any physical quid pro quo by Israel.

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Solution: d)

Market Stabilisation Scheme (MSS): This instrument for monetary management was introduced in 2004. Surplus liquidity of a more enduring nature arising from large capital inflows is absorbed through sale of short-dated government securities and treasury bills. The cash so mobilised is held in a separate government account with the Reserve Bank.

Open Market Operations (OMOs): These include both, outright purchase and sale of government securities, for injection and absorption of durable liquidity, respectively.

Marginal Standing Facility (MSF): A facility under which scheduled commercial banks can borrow additional amount of overnight money from the Reserve Bank by dipping into their Statutory Liquidity Ratio (SLR) portfolio up to a limit at a penal rate of interest. This provides a safety valve against unanticipated liquidity shocks to the banking system.

Solution: d)

India CPI Inflation, IIP Growth Rate: The country’s retail inflation, which is measured by the Consumer Price Index (CPI), eased to 4.59 per cent in the month of December mainly due to decline in food prices. Separately, India’s factory output, measured in terms of Index of Industrial Production (IIP), witnessed a contraction of -1.9 per cent in November, two separate data released by the Ministry of Statistics & Programme Implementation (MoSPI).

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Solution: c)