UPSC Prelims Practice Questions — Timely inaction

Q1. The Reserve Bank of India's first bi-monthly monetary policy for FY 2026-27, which kept the repo rate unchanged at 5.25% with a neutral stance, was announced under the chairship of which of the following?

  • A. Shaktikanta Das
  • B. Sanjay Malhotra
  • C. Urjit Patel
  • D. Raghuram Rajan

Q2. With reference to how the RBI MPC's April 2026 policy projections for FY 2026-27 compare with those in its June 2026 review, consider the following statements: 1. The April 2026 policy projected FY27 real GDP growth at 6.9%, higher than the figure projected in the June 2026 review. 2. The April 2026 policy projected FY27 CPI inflation at 4.6%, lower than the figure projected in the June 2026 review. 3. Both the April 2026 and the June 2026 policies altered the repo rate from its prevailing level. Which of the statements given above is/are correct?

  1. The April 2026 policy projected FY27 real GDP growth at 6.9%, higher than the figure projected in the June 2026 review.
  2. The April 2026 policy projected FY27 CPI inflation at 4.6%, lower than the figure projected in the June 2026 review.
  3. Both the April 2026 and the June 2026 policies altered the repo rate from its prevailing level.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q3. The three external members of the Monetary Policy Committee are appointed by which of the following?

  • A. The Central Government
  • B. The Governor of the RBI
  • C. The Central Board of the RBI
  • D. The Financial Stability and Development Council

Q4. Under India's flexible inflation targeting framework, the inflation target is defined primarily in terms of which single price index?

  • A. Wholesale Price Index (WPI)
  • B. Consumer Price Index (Combined)
  • C. CPI for Industrial Workers
  • D. GDP deflator

Q5. With reference to India's flexible inflation targeting framework, consider the following: 1. The current target is 4% CPI inflation with a tolerance band of +/- 2 percentage points. 2. The target is reviewed by the Central Government, in consultation with the RBI, every five years. 3. If the target is breached, the RBI must submit a report to the Central Government explaining the failure. 4. Failure to achieve the target is defined as average inflation breaching the band for two consecutive quarters. Which of the statements given above is/are correct?

  1. The current target is 4% CPI inflation with a tolerance band of +/- 2 percentage points.
  2. The target is reviewed by the Central Government, in consultation with the RBI, every five years.
  3. If the target is breached, the RBI must submit a report to the Central Government explaining the failure.
  4. Failure to achieve the target is defined as average inflation breaching the band for two consecutive quarters.
  • A. 1 and 2 only
  • B. 1, 2 and 3 only
  • C. 2, 3 and 4 only
  • D. 1, 2, 3 and 4

Q6. In its December 2025 policy, by how many basis points did the RBI MPC reduce the repo rate to bring it to 5.25%?

  • A. 15 basis points
  • B. 25 basis points
  • C. 35 basis points
  • D. 50 basis points

Q7. With reference to the RBI MPC's repo rate decisions across 2025-26, consider the following statements: 1. In December 2025 the MPC reduced the repo rate, whereas in February 2026 it left the repo rate unchanged. 2. The repo rate stood at 5.5% before the December 2025 policy and at 5.25% after it. 3. The April 2026 policy reversed the December 2025 action by raising the repo rate. Which of the statements given above is/are correct?

  1. In December 2025 the MPC reduced the repo rate, whereas in February 2026 it left the repo rate unchanged.
  2. The repo rate stood at 5.5% before the December 2025 policy and at 5.25% after it.
  3. The April 2026 policy reversed the December 2025 action by raising the repo rate.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q8. The external benchmark-based lending rate (EBLR) system, introduced to strengthen monetary policy transmission, was made mandatory for new floating-rate retail and MSME loans by which authority?

  • A. The Securities and Exchange Board of India
  • B. The Reserve Bank of India
  • C. The Ministry of Finance
  • D. The Indian Banks' Association

Q9. Approximately what share of the world's oil and gas supplies normally transits the Strait of Hormuz?

  • A. About one-tenth
  • B. About one-fifth
  • C. About one-third
  • D. About one-half

Q10. With reference to the policy 'stances' used in the RBI Monetary Policy Committee's communication, consider the following: 1. Accommodative 2. Neutral 3. Calibrated tightening 4. Quantitative easing Which of the above is/are correctly identified as a monetary policy stance of the MPC?

  1. Accommodative
  2. Neutral
  3. Calibrated tightening
  4. Quantitative easing
  • A. 1 and 2 only
  • B. 1, 2 and 3 only
  • C. 2, 3 and 4 only
  • D. 1, 2, 3 and 4

Q11. The statutory power to set the inflation target that the Monetary Policy Committee is mandated to achieve rests with which of the following under the RBI Act, 1934?

  • A. The Governor of the RBI
  • B. The Central Government, in consultation with the RBI
  • C. The Monetary Policy Committee itself
  • D. Parliament, through an annual resolution