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      Question

      The Economic Survey 2024-25 heavily emphasizes the "Core

      Inflation" trajectory in India. Core inflation is conceptually a more robust indicator for long-term monetary policy formulation because it:
      A Includes highly volatile food prices to reflect ground realities. Correct Answer Incorrect Answer
      B Excludes volatile components like food and fuel to capture underlying demand pressures. Correct Answer Incorrect Answer
      C Is calculated directly by the Reserve Bank of India rather than the NSO. Correct Answer Incorrect Answer
      D Focuses exclusively on rural consumption patterns. Correct Answer Incorrect Answer

      Solution

      Core inflation strips out transient supply-side shocks associated with food and fuel prices. For inflation targeting and monetary policy rules under the RBI DEPR framework, tracking core inflation allows policymakers to isolate structural demand-pull inflation from temporary seasonal fluctuations.

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