Q4. 4. Based on the above passage, the following assumptions have been made :
1. Fiscal policies of governments are solely responsible for higher prices.
2. Higher prices do not affect the long-term government bonds. Which of the assumptions given above is/are valid?
Detailed Solution
Assumption 1 is invalid. The passage discusses how both fiscal policies (government spending) and monetary policies (central bank interest rates) influence inflation, stating that "Higher interest rates become inflationary." This implies that monetary policy also plays a role, so fiscal policies are not *solely* responsible for higher prices.
Assumption 2 is invalid. The passage does not mention long-term government bonds or their relationship with higher prices at all. Therefore, no information is provided to support or refute this assumption.
Both assumptions cannot be considered valid based on the provided text. This question requires careful adherence to the information presented in the passage and avoiding the introduction of external economic knowledge.
More Monetary and Fiscal Policy Questions
More Reading Comprehension Questions
Q24. With reference to the above passage, the following assumptions have been made: I. People above the p...
AQ22. With reference to the above passage, the following assumptions have been made: I. Green energy produ...
AQ32. With reference to the above passage, the following assumptions have been made: I. No country needs t...
DQ11. Which one of the following statements best reflects the corollary to the above passage?...
AQ21. Which one of the following statements best reflects the most logical, rational and pragmatic message...
DMore from UPSC 2024 CSAT
Q1. 1. Which of the following statements best reflect the most logical and rational inferences that can ...
BQ2. 2. Based on the above passage, the following assumptions have been made : 1. The food distribution m...
AQ3. 3. Which of the following statements best reflects/reflect the most logical and rational inference/i...
CQ5. 5. What is the least possible number of cuts required to cut a cube into 64 identical pieces?...
BQ6. 6. In the expression 5 * 4* 3* 2* 1, * is chosen from +, -, × each at most two times. What is the sm...
DAce UPSC with AI-powered Practice
LearnPro's test series adapts to your weak topics and shows real analytics.
Explore Courses →