Question 1

Read the following paragraphs and answer the question that follows:

The current trend indicates that food and vegetable inflations continue to be pain points. Food inflation rose to 7.79 percent in June from 7.47 percent, and vegetable inflation rose to 14.74 percent from 10.85 percent. In the weeks ahead, the volatile food inflation will determine the course of overall inflation.

For RBI too, the trend is a concern since under the current agreement with the government, if the inflation exceeds 11 percent it will have to explain to the government why it could not be contained (the lower limit is 2 percent).

Which of the following options is the most appropriate?

Solution

The first paragraph highlights the inflation conditions prevalent in the country. In the second paragraph, the author states that the inflation is a concern for the RBI too since it will have to explain if the inflation exceeds 11%. Therefore, we can infer that RBI is responsible for keeping the inflation in check. The rise in inflation hints that the RBI is inefficient in handling the issue.

The first paragraph talks about inflation and the second paragraph talks about RBI's inefficiency in handling the same. Therefore, option D is the right answer.

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