MONEY AND BANKING (Part – I)

61. Consider the following consumer price index : [B.P.S.C (Pre) 2015]

1.Consumer Price Index for Industrial Workers.
2.Consumer Price Index for Agricultural Labourers.
3.Consumer Price Index for Rural Workers.
4.Consumer Price Index for Urban Non-manual Employees.

In the given indexes, which is/are compiled by Central Statistics Office (CSO)?

(a) Only 3 and 4
(b) Only 1, 2, and 3
(C) Only 4
(d) Only 4 and 2

Correct Answer: (C) Only 4

Solution:CPI for Industrial Workers (CPI-IW), CPI for Agricultural Labourers (CPI-AL) and CPI for Rural Labourers (CPI-RL) indexes are compiled by Labour Bureau in the Ministry of Labour and Employment. While CPI for Urban Non-Manual Employees (CPI-UNME) was earlier computed by CSO, which was discontinued since April, 2008. The CPI-Urban and CPI- Rural (and CPI-Combined) Indexes are compiled by the National Statistical Office (NSO) in the Ministry of Statistics and Programme implementation.

62. Which of the following brings out the 'Consumer Price Index Number for Industrial Workers'? [U.P.S.C (Pre) 2010]

(a) The Reserve Bank of India
(b) The Department of Economic Affairs
(C) The Labour Bureau
(d) The Department of Personal and Training

Correct Answer: (C) The Labour Bureau

Solution:CPI for Industrial Workers (CPI-IW), CPI for Agricultural Labourers (CPI-AL) and CPI for Rural Labourers (CPI-RL) indexes are compiled by Labour Bureau in the Ministry of Labour and Employment. While CPI for Urban Non-Manual Employees (CPI-UNME) was earlier computed by CSO, which was discontinued since April, 2008. The CPI-Urban and CPI- Rural (and CPI-Combined) Indexes are compiled by the National Statistical Office (NSO) in the Ministry of Statistics and Programme implementation.

63. The base of Consumer Price Index for industrial workers has been shifted from 1982 to : [U.P.P.C.S (Mains) 2008]

(a) 2002
(b) 2001
(C) 2000
(d) 1998

Correct Answer: (b) 2001

Solution:The Consumer Price Index for Industrial Workers (CPI-IW) is compiled by the Labour Bureau under the Ministry of Labour and Employment. The base year of CPI-IW has been revised from 2001 to 2016 with effect from September, 2020 to reflect the changing consumption pattern. The job of compilation and maintenance of CPI-IW was taken over by the Central Government in 1941. After that, the Labour Bureau has been compiling and maintaining the CPI-IW since 1944. However, All India CPI-IW was first introduced on uniform and scientific lines with base year 1960 = 100 which was based on the results of Family Living Survey conducted in 1958-59. The series was then updated in 1988 on base year 1982 100 and a revision in 2006 has further updated the base year to 2001 = 100.

64. Industrial Consumer Price Index year 1960 was changed to which base year? [U.P.P.C.S (Pre) 1990]

(a) 1971
(b) 1980
(C) 1982
(d) 1990

Solution:The Consumer Price Index for Industrial Workers (CPI-IW) is compiled by the Labour Bureau under the Ministry of Labour and Employment. The base year of CPI-IW has been revised from 2001 to 2016 with effect from September, 2020 to reflect the changing consumption pattern. The job of compilation and maintenance of CPI-IW was taken over by the Central Government in 1941. After that, the Labour Bureau has been compiling and maintaining the CPI-IW since 1944. However, All India CPI-IW was first introduced on uniform and scientific lines with base year 1960 = 100 which was based on the results of Family Living Survey conducted in 1958-59. The series was then updated in 1988 on base year 1982 100 and a revision in 2006 has further updated the base year to 2001 = 100.

65. Which of the following price index is used to compensate the wages of Central Government employees? [U.P.U.D.A/L.D.A (Pre) 2001]

(a) Wholesale Price Index
(b) Consumer Price Index for Industrial Workers
(C) Consumer Price Index for Agriculture Labourers
(d) None of the above

Correct Answer: (b) Consumer Price Index for Industrial Workers

Solution:Consumer Price Index for Industrial Workers (CPI-IW) is used to compensate the wages of Central Government employees. It is generally argued that WPI inflation is not an appropriate index to determine the impact of price rise on the cost of living of the common man. Rather, the Consumer Price Index for Industrial Workers (CPI-IW), which also includes selected services and is measured on the basis of retail prices, and is used to determine the dearness allowance of employees in both the public and private sectors, is the appropriate indicator of general inflation. Food items have higher weights in CPI-IW than in WPI.

66. The basis of determining dearness allowances to employees of India is : [Uttarakhand U.D.A/L.D.A (Pre) 2007, U.P.P.C.S (Mains) 2008, U.P Lower Sub. (Pre) 2008]

(a) National Income
(b) Consumer Price Index
(C) Standard of Living
(d) Per Capita Income

Correct Answer: (b) Consumer Price Index

Solution:In India, Consumer Price Index for Industrial Workers (CPI-IW) is used for tracking inflation and for fixing dearness allowances (DA) of employees and industrial workers.

The CPI measures the average change in prices of a fixed basket of goods and services that households typically consume. It reflects how the purchasing power of money changes over time due to inflation.
Components
: CPI includes various categories, such as:
Food and Beverages: Items like cereals, pulses, vegetables, milk, meat, and beverages.
Housing: Rent or imputed rent for self-occupied houses.
Clothing and
Footwear: Costs of garments, footwear, and other related items.
Fuel and Light:
Includes LPG, kerosene, firewood, and electricity.
Miscellaneous: Education, healthcare, transport, communication, and recreation expenses.
Publishing Authority: The Ministry of Statistics and Programme Implementation (MOSPI) is responsible for
compiling and releasing CPI data.

67. Which of the following Institution/Office bring out the Wholesale Price Index (WPI) data in India? [U.P.P.C.S (Pre) 2021]

(a) The Reserve Bank of India
(b) The Ministry of Commerce and Industry
(C) The Ministry of Finance
(d) The Ministry of Consumer Affairs Food and Public Distribution

Correct Answer: (b) The Ministry of Commerce and Industry

Solution:Wholesale Price Index, or WPI, measures the changes in the prices of goods sold and traded in bulk by wholesale businesses to other businesses.
Wholesale market is only for goods, one cannot buy services on a wholesale basis. It is used to track the supply and demand dynamics in industry, manufacturing and construction. The index is released by the Economic Advisor in the Ministry of Commerce and Industry every month. The quantum of rise in the WPI month-after-month is used to measure the level of wholesale inflation in the economy.
The index is based on the wholesale prices of number of relevant commodities available. The commodities are chosen based on their significance in the region. These represent different strata of the economy and are expected to provide a comprehensive WPI value.
Number of commodities: 697 items
Base year: 2011-12..

68. With reference to the Wholesale Price Index (WPI), consider the following statements: [U.P.S.C (Pre) 2002]

1.The new WPI series with base year 1993-94 = 100 became effective from April,1998.
2.In the new WPI series, the weight for primary articles has gone down by 10 percentage points.
3.The weight for electricity has increased in the new WPI series.

Which of these statements are correct?

(a) 1, 2 and 3
(b) 2 and 3
(C) 1 and 3
(d) 1 and 2

Correct Answer: (b) 2 and 3

Solution:The new Wholesale Price Index (WPI) series with the base 1993-94 = 100 was introduced in April, 2000 and not in April, 1998. Thus, Statement 1 is incorrect while Statements 2 and 3 were correct as per that WPI series. On 12 May, 2017 (effective from April, 2017) the base year of the Wholesale Price Index (WPI) has been revised from 2004-05 to 2011-12. In the revised WPI basket the weight of Primary articles is 22.62%, whereas the weight of fuel and power is 13.15% and weight of manufactured products is 64.23 percent.

69. What is the weightage (in percent) of manufactured products in calculation of Wholesale Price Index (WPI)? [Chhattisgarh P.C.S (Pre) 2021]

(a) 62.43%
(b) 64.23%
(C) 63.43%
(d) 60.23%

Correct Answer: (b) 64.23%

Solution:The new Wholesale Price Index (WPI) series with the base 1993-94 = 100 was introduced in April, 2000 and not in April, 1998. Thus, Statement 1 is incorrect while Statements 2 and 3 were correct as per that WPI series. On 12 May, 2017 (effective from April, 2017) the base year of the Wholesale Price Index (WPI) has been revised from 2004-05 to 2011-12. In the revised WPI basket the weight of Primary articles is 22.62%, whereas the weight of fuel and power is 13.15% and weight of manufactured products is 64.23 percent.

70. In calculation of Index of wholesale prices which one of the following sectors is assigned maximum weightage? [U.P.P.C.S (Mains) 2008]

(a) Food articles
(b) Non-food articles
(C) Fuel, Power, light and Lubricants
(d) Manufactured products

Correct Answer: (d) Manufactured products

Solution:The new Wholesale Price Index (WPI) series with the base 1993-94 = 100 was introduced in April, 2000 and not in April, 1998. Thus, Statement 1 is incorrect while Statements 2 and 3 were correct as per that WPI series. On 12 May, 2017 (effective from April, 2017) the base year of the Wholesale Price Index (WPI) has been revised from 2004-05 to 2011-12. In the revised WPI basket the weight of Primary articles is 22.62%, whereas the weight of fuel and power is 13.15% and weight of manufactured products is 64.23 percent.