Economy & Business MCQs - 2026-04-03

The RBI's inflation target is 4% with a tolerance band of +/- 2%, meaning it aims to keep inflation between 2% and 6%.

An increase in the repo rate makes it more expensive for banks to borrow from the RBI, which in turn leads to higher lending rates for businesses and consumers, thus increasing borrowing costs.

Core inflation is a measure of inflation that excludes the more volatile components of the Consumer Price Index (CPI), typically food and energy prices, to provide a clearer picture of underlying price pressures.

The Monetary Policy Committee (MPC) is responsible for setting the benchmark interest rate (repo rate) and other monetary policy tools to manage liquidity and inflation in the economy.

The RBI's mandate is to maintain price stability (control inflation) while also considering the objective of economic growth. This dual mandate is central to its monetary policy formulation.

Most forecasts from international and domestic financial institutions place India's GDP growth rate for FY27 in the range of 6.5% to 7.5%.

Increasing import tariffs on all goods would generally be considered protectionist rather than a structural reform aimed at improving the overall economic environment and competitiveness.

Sustained high GDP growth projections indicate India's economic resilience and its growing potential to become a significant global economic player, which is a key aspect for exam preparation.

The 'Make in India' initiative and PLI schemes are specifically designed to encourage domestic manufacturing, attract foreign investment in manufacturing, and enhance the competitiveness of Indian manufacturers.

Robust domestic demand, driven by consumption and investment, coupled with sustained government capital expenditure on infrastructure, are identified as primary drivers for India's projected GDP growth in FY27.