Daily Current Affairs (MCQ) | Date 21.02.22

Q1. The wholesale Price Index (WPI) is computed by

a. The Office of the Economic Adviser in the Ministry of Commerce & Industry
b. The National Statistical Office (NSO) in the Ministry of Statistics and Programme Implementation
c. The Reserve Bank of India
d. State Bank of India

Answer : a

Why is the Question ?

Wholesale Price Index
The wholesale Price Index (WPI) is computed by the Office of the Economic Adviser in the Ministry of Commerce & Industry, Government of India. It was earlier released on a weekly basis for Primary Articles and Fuel Group. However, since 2012, this practice has been discontinued. Currently, WPI is released monthly.

Q2. Consider the following statements

1. Consumer Price Indices (CPI) Rural is released by the National Statistical Office (NSO) in the Ministry of Statistics and Programme Implementation
2. Consumer Price Indices (CPI) Urban is used by RBI for inflation targeting

Which of the above is/are correct?

a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2

Answer : a

Why is the Question ?

Consumer Price Indices (CPI) released at the national level are:
 CPI for Industrial Workers (IW)
 CPI for Agricultural Labourers (AL)/ Rural Labourers (RL)
 CPI (Rural/Urban/Combined
While the first two are compiled and released by the Labour Bureau in the Ministry of Labour and Employment, the third is by the National Statistical Office (NSO) in the Ministry of Statistics and Programme Implementation. In India, RBI uses CPI (combined) released by CSO for inflation purposes.

Q3. Which of the following are differences between Wholesale Price Index (WPI) and Consumer Price Index (CPI)?

1. CPI is used for adjusting income and expenditure streams for changes in the cost of living
2. WPI is based on wholesale prices for primary articles
3. CPI is based on retail prices

Select the correct answer using the codes given below

a. 1 and 2 only
b. 2 and 3 only
c. 1 and 3 only
d. 1, 2 and 3 

Answer : d

Why is the Question ?

Key differences between WPI & CPI
 Primary use of WPI is to have an inflationary trend in the economy as a whole. However, CPI is used for adjusting income and expenditure streams for changes in the cost of living.
 WPI is based on wholesale prices for primary articles, administered prices for fuel items and ex-factory prices for manufactured products. On the other hand, CPI is based on retail prices, which include all distribution costs and taxes.

 Prices for WPI are collected on a voluntary basis while price data for CPI are collected by investigators by visiting markets.
 CPI covers only consumer goods and consumer services while WPI covers all goods including intermediate goods transacted in the economy.
 WPI weights are primarily based on national accounts and enterprise survey data and CPI weights are derived from consumer expenditure survey data.

Q4. Which of the following are included in the GDP calculation of India?

1. Profits earned by Chinese Company Xiaomi by selling smartphones in India
2. Profits earned by ONGC Videsh from its subsidiaries in different countries

Select the correct answer from the codes given below

a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2

Answer : a

Why is the Question ?

Gross domestic product (GDP) and gross national product (GNP) are both widely used measures of a country's aggregate economic output. GDP measures the value of goods and services produced within a country's borders, by citizens and non-citizens alike. GNP measures the value of goods and services produced by only a country's citizens but both domestically and abroad. GDP is the most commonly used by global economies. The United States abandoned the use of GNP in 1991, adopting GDP as its measure to compare itself with other economies.
Gross domestic product (GDP) is the value of a nation's finished domestic goods and services during a specific time period. A related but different metric, the gross national product (GNP), is the value of all finished goods and services owned by a country's residents over a period of time.
Both GDP and GNP are two of the most commonly used measures of a country's economy, both of which represent the total market value of all goods and services produced over a defined period.
There are differences between how each one defines the scope of the economy. While GDP limits its interpretation of the economy to the geographical borders of the country, GNP extends it to include the net overseas economic activities performed by its nationals.
For example, profits earned by Chinese Company Xiaomi by selling smartphones in India will not be included in the GNP of India but in GDP. Similarly, Profits earned by ONGC Videsh from its subsidiaries in different countries will be included in the GNP of India, not in GDP.

Q5. Which of the following factors will lead to an increase in purchasing power of consumers?

1. Reduction in inflation
2. Reduction in indirect tax
3. High increase in money supply in economy

Select the correct answer using the codes given below

a. 1 and 2 only
b. 2 and 3 only
c. 1 and 3 only
d. 1, 2 and 3

Answer : d

Why is the Question ?

Indirect taxes reduction will reduce cost thus purchasing power will increase.
Inflation refers to an increase in market prices of goods and services that consequently lead to a decrease in the purchasing power of consumers. High increase in money supply leads to inflation thus low purchasing power.

Q6. How does the Consumer Price Index help?

1. The price change of various commodities and keep a tab on inflation
2. CPI is also a helpful pointer in understanding the real value of wages, salaries and pensions
3. It helps in understanding the purchasing power of a country’s currency

Select the correct answer using the codes given below

a. 1 and 2 only

b. 2 and 3 only
c. 1 and 3 only
d. 1, 2 and 3

Answer : d

Why is the Question ?

How does the Consumer Price Index help?
The Reserve Bank of India and other statistical agencies studyCPI so as to understand the price change of various commodities and keep a tab on inflation. CPI is also a helpful pointer in understanding the real value of wages, salaries and pensions, the purchasing power of a country’s currency; and regulating prices. Economists are in charge of collecting data by surveying households on their buying patterns, most purchased items, and daily expenses.