Which are uses of Consumer Price Index for rural urban and combined section 1 CPI is used as a macro...........

Economic and social issues(Phase-I/II) Inflation Trends

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Which are uses of Consumer Price Index for rural urban and combined section?

1) CPI is used as a macroeconomic indicator of infation

2) Government of India and RBI use CPI for targeting infation & for monitoring price stability

3) It is used as a defator in national accounts.

This questions was previously asked in

Nabard grade-A, Previous year Memory Based Paper (2023)

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1 Only

1 and 3 Only

1 and 2 Only

2 and 3 Only

All of the above

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Explanation:

Absolutely, here’s how it all breaks down:

- The Consumer Price Index (CPI)—for rural, urban, and combined sectors—is a key way to measure inflation in the economy. It's literally what most folks think of when you say "inflation indicator."

- The Government of India and the Reserve Bank of India both use CPI when they’re setting inflation targets or trying to keep inflation in check. It’s their north star for tracking price stability.

- CPI also acts as a deflator in the national accounts. That basically means it helps convert current prices into constant prices so you actually know if the economy’s growing in real terms, not just because stuff is getting pricier.

Now, let’s check the options:

- Option 1: Only talks about macro indicator. True, but doesn’t cover the rest.

- Option 2: Macro and deflator. Still missing the policy angle.

- Option 3: Macro and policy, but skips the deflator bit.

- Option 4: Policy and deflator, but skips the broader macro indicator bit.

- Option 5: All of the above. This covers everything.

Option 5 is the right pick.