UPSC Prelims Practice Questions — Cautious resilience, FinMin says as inflation risk looms

Q1. The Monthly Economic Review (MER), which characterised India's macro position as 'cautious resilience' in May 2026, is brought out primarily by which one of the following bodies?

  • A. The Economic Division of the Department of Economic Affairs, Ministry of Finance
  • B. The National Statistical Office under the Ministry of Statistics and Programme Implementation
  • C. The Monetary Policy Committee of the Reserve Bank of India
  • D. The Economic Advisory Council to the Prime Minister

Q2. The Monthly Economic Review tracks a set of high-frequency indicators to gauge real-time economic activity. With reference to these, consider the following: Which of the above is/are correctly identified as high-frequency indicators used in the MER?

  1. E-way bill generation
  2. Purchasing Managers' Index (PMI)
  3. Electricity consumption
  4. Decadal Census enumeration figures
  • A. 1 and 2 only
  • B. 2, 3 and 4 only
  • C. 1, 2 and 3 only
  • D. 1, 2, 3 and 4

Q3. With reference to the Wholesale Price Index (WPI) and the Consumer Price Index (CPI) in India, consider the following statements: Which of the above is/are correctly identified?

  1. WPI is released by the Office of the Economic Adviser under the Ministry of Commerce and Industry.
  2. CPI is released by the National Statistical Office under the Ministry of Statistics and Programme Implementation.
  3. WPI captures prices of services, whereas CPI excludes them.
  4. The revised WPI series adopts 2022-23 as its base year.
  • A. 1, 2 and 4 only
  • B. 1 and 3 only
  • C. 2, 3 and 4 only
  • D. 1, 2, 3 and 4

Q4. With reference to the revised Consumer Price Index (CPI) series with base year 2024=100, consider the following statements: Which of the statements given above is/are NOT correct?

  1. Its base year is 2024=100, replacing the earlier 2012=100 series.
  2. Its weights are derived from the Household Consumption Expenditure Survey 2023-24.
  3. It adopts the COICOP 2018 classification developed by the UN Statistics Division.
  4. It is compiled and released by the Reserve Bank of India.
  • A. 1 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 4 only

Q5. The preparation and presentation of the Union Budget to Parliament falls under the responsibility of which one of the following departments of the Ministry of Finance?

  • A. Department of Economic Affairs
  • B. Department of Expenditure
  • C. Department of Revenue
  • D. Department of Financial Services

Q6. With reference to the division of work among departments of the Ministry of Finance, consider the following statements: Which of the statements given above is/are correct?

  1. The Department of Economic Affairs is the nodal department for macroeconomic policy and capital markets, whereas the Department of Revenue administers direct and indirect taxes.
  2. Disinvestment and management of the government's equity in central public sector enterprises is handled by DIPAM rather than by the Department of Economic Affairs.
  3. The management of India's external debt and multilateral funding is handled by the Department of Expenditure and not by the Department of Economic Affairs.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q7. Which one of the following is the flagship annual document, prepared by the Economic Division of the DEA, that is presented in Parliament by the Union Finance Minister immediately before the Union Budget?

  • A. Economic Survey
  • B. Monthly Economic Review
  • C. Monetary Policy Report
  • D. Half-Yearly Economic Review

Q8. With reference to the Economic Survey and the Monthly Economic Review, consider the following statements: Which of the above is/are correctly identified?

  1. The Economic Survey is prepared under the overall guidance of the Chief Economic Adviser.
  2. The Monthly Economic Review is a monthly publication of the Economic Division of the Department of Economic Affairs.
  3. The Economic Survey is a legally binding document that the government is obligated to implement through the Budget.
  4. Both documents are produced by the Economic Division of the Department of Economic Affairs.
  • A. 1, 2 and 4 only
  • B. 1 and 3 only
  • C. 2, 3 and 4 only
  • D. 1, 2, 3 and 4

Q9. The sharp rise in global crude oil prices flagged in the May 2026 Monthly Economic Review was primarily attributed to the closure, in March 2026, of which one of the following maritime chokepoints?

  • A. Strait of Hormuz
  • B. Strait of Malacca
  • C. Bab-el-Mandeb Strait
  • D. Suez Canal

Q10. With reference to the macroeconomic data cited around the May 2026 Monthly Economic Review during the West Asia conflict, consider the following: Which of the above is/are correctly identified?

  1. Retail (CPI) inflation, April 2026 — 3.48%
  2. Wholesale (WPI) inflation, May 2026 — 9.68%
  3. Indian basket crude oil, April 2026 average — US$106 per barrel
  4. Foreign portfolio investor outflow after the escalation — about US$23.6 billion
  • A. 1, 2 and 4 only
  • B. 2, 3 and 4 only
  • C. 1 and 3 only
  • D. 1, 2, 3 and 4

Q11. The below-normal southwest monsoon forecast for 2026, cited in the Monthly Economic Review as a food-inflation risk, is officially issued by which one of the following agencies?

  • A. India Meteorological Department, Ministry of Earth Sciences
  • B. Central Water Commission, Ministry of Jal Shakti
  • C. National Remote Sensing Centre, ISRO
  • D. Indian Agricultural Research Institute, ICAR

Q12. Under the Reserve Bank of India Act, 1934, who is the ex-officio Chairperson of the six-member Monetary Policy Committee that determines the policy repo rate and also holds a casting vote in case of a tie?

  • A. Governor of the Reserve Bank of India
  • B. Deputy Governor in charge of monetary policy
  • C. Union Finance Minister
  • D. Chief Economic Adviser