UPSC Prelims Practice Questions — Demand driving growth, but economic outlook somewhat clouded: RBI report

Q1. The RBI's 'State of the Economy' assessment, tracked by aspirants for high-frequency growth and inflation trends, appears as a recurring feature of which one of the following RBI publications?

  • A. The monthly RBI Bulletin
  • B. The Financial Stability Report
  • C. The Report on Trend and Progress of Banking in India
  • D. The half-yearly Monetary Policy Report

Q2. With reference to the RBI's 'State of the Economy' article, consider the following statements: 1. It is published as part of the RBI's monthly Bulletin. 2. The views expressed in it represent the official policy stance of the Reserve Bank of India. 3. It is authored by RBI staff, drawn largely from the Department of Economic and Policy Research. 4. It relies substantially on high-frequency indicators rather than lagged official GDP data. Which of the statements given above are correct?

  1. It is published as part of the RBI's monthly Bulletin.
  2. The views expressed in it represent the official policy stance of the Reserve Bank of India.
  3. It is authored by RBI staff, drawn largely from the Department of Economic and Policy Research.
  4. It relies substantially on high-frequency indicators rather than lagged official GDP data.
  • A. 1 and 3 only
  • B. 1, 3 and 4
  • C. 2 and 4 only
  • D. 1, 2 and 3

Q3. According to the April 2026 'State of the Economy' article, consider the following high-frequency observations: 1. Electricity demand rose owing to heat-wave conditions. 2. Air passenger traffic declined amid higher Aviation Turbine Fuel prices. 3. Rural automobile sales contracted into negative growth. 4. Overall petroleum consumption fell in April. Which of the above is/are correctly identified?

  1. Electricity demand rose owing to heat-wave conditions.
  2. Air passenger traffic declined amid higher Aviation Turbine Fuel prices.
  3. Rural automobile sales contracted into negative growth.
  4. Overall petroleum consumption fell in April.
  • A. 1, 2 and 4
  • B. 2, 3 and 4
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q4. At its April 2026 review (first policy meeting of FY 2026-27), amid the West Asia crisis the six-member Monetary Policy Committee left the policy repo rate unchanged at what level?

  • A. 5.25 per cent
  • B. 6.00 per cent
  • C. 6.25 per cent
  • D. 6.50 per cent

Q5. With reference to high-frequency indicators of economic activity, consider the following statements: 1. They are tracked to gauge economic momentum ahead of the lagged official GDP data. 2. A Purchasing Managers' Index (PMI) reading above 50 signals expansion in the sector. 3. E-way bills are mandated only for consignments valued below Rs 50,000. Which of the statements given above is/are correct?

  1. They are tracked to gauge economic momentum ahead of the lagged official GDP data.
  2. A Purchasing Managers' Index (PMI) reading above 50 signals expansion in the sector.
  3. E-way bills are mandated only for consignments valued below Rs 50,000.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q6. The e-way bill, widely watched as a high-frequency indicator of domestic trade, is a compliance requirement under which one of the following?

  • A. The Goods and Services Tax (GST) regime
  • B. The Customs Act, 1962
  • C. Regulations of the Securities and Exchange Board of India
  • D. The Foreign Exchange Management Act, 1999

Q7. With reference to the labour market indicators cited for the January-March 2026 quarter, consider the following statements: 1. The Labour Force Participation Rate (LFPR) is the share of persons in the labour force in the population, while the Worker Population Ratio (WPR) is the share of employed persons in the population. 2. The overall LFPR moderated in January-March 2026 relative to the preceding quarter. 3. Rural LFPR in January-March 2026 was lower than urban LFPR. Which of the statements given above is/are correct?

  1. The Labour Force Participation Rate (LFPR) is the share of persons in the labour force in the population, while the Worker Population Ratio (WPR) is the share of employed persons in the population.
  2. The overall LFPR moderated in January-March 2026 relative to the preceding quarter.
  3. Rural LFPR in January-March 2026 was lower than urban LFPR.
  • A. 1 and 2 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q8. The LFPR and WPR estimates referenced in these assessments come from the Periodic Labour Force Survey (PLFS), which is the sole official source of such data and is conducted by which one of the following?

  • A. The National Statistics Office under the Ministry of Statistics and Programme Implementation
  • B. The Labour Bureau under the Ministry of Labour and Employment
  • C. The NITI Aayog
  • D. The Centre for Monitoring Indian Economy (CMIE)

Q9. Amid the West Asia crisis and elevated energy prices, by approximately how much did India's crude oil import bill rise year-on-year in May 2026?

  • A. About 81.5 per cent
  • B. About 42 per cent
  • C. About 30 per cent
  • D. About 14.5 per cent

Q10. According to assessments of the crude oil shock, consider the likely effects of a sustained USD 10 per barrel rise in crude prices on the Indian economy: 1. It widens the current account deficit. 2. It exerts depreciation pressure on the rupee. 3. It tends to lower Wholesale Price Index (WPI) inflation. 4. It raises the oil import bill. Which of the above is/are correctly identified?

  1. It widens the current account deficit.
  2. It exerts depreciation pressure on the rupee.
  3. It tends to lower Wholesale Price Index (WPI) inflation.
  4. It raises the oil import bill.
  • A. 1, 2 and 4
  • B. 1, 3 and 4
  • C. 2, 3 and 4
  • D. 1 and 3 only

Q11. A below-normal / rain-deficient monsoon was flagged as a key domestic risk to India's growth-inflation dynamics in the 'State of the Economy' article of which 2026 edition of the RBI Bulletin?

  • A. June 2026
  • B. April 2026
  • C. May 2026
  • D. March 2026

Q12. With reference to the Monetary Policy Committee (MPC) of the RBI, consider the following statements: 1. It is constituted under Section 45ZB of the RBI Act, 1934. 2. It is a six-member body with the RBI Governor as ex-officio Chairperson. 3. All six members of the MPC are officials of the Reserve Bank of India. 4. It is entrusted with determining the policy (repo) rate required to achieve the inflation target. Which of the above is/are correctly identified?

  1. It is constituted under Section 45ZB of the RBI Act, 1934.
  2. It is a six-member body with the RBI Governor as ex-officio Chairperson.
  3. All six members of the MPC are officials of the Reserve Bank of India.
  4. It is entrusted with determining the policy (repo) rate required to achieve the inflation target.
  • A. 1 and 2 only
  • B. 1, 2 and 4
  • C. 2, 3 and 4
  • D. 1, 3 and 4