DAILY CURRENT AFFAIRS QUIZ – 27 December, 2025

Explanation:
GS Paper III covers economic growth, inflation, monetary policy, and macroeconomic management. RBI’s policy decisions and growth-inflation dynamics fall squarely under this paper. Questions often test understanding of trade-offs and policy tools. Hence, GS III is most relevant.

Explanation:
Global commodity prices, especially oil and food, affect domestic inflation. Imported inflation can occur despite moderate domestic demand. RBI must factor in global risks while setting policy. This can justify cautious growth outlooks.

Explanation:
Excessive growth stimulation can create asset bubbles and financial instability. RBI prioritises macroeconomic stability over short-term growth. Controlled growth ensures sustainable expansion. Preventing overheating protects long-term economic health.

Explanation:
Core inflation excludes volatile food and fuel prices. It reflects underlying demand pressures in the economy. RBI closely tracks core inflation to assess persistence of price pressures. Rising core inflation often signals need for tighter policy.

Explanation:
Capital-intensive industries rely heavily on borrowed funds. High interest rates raise project costs and reduce investment appetite. Infrastructure, manufacturing, and real estate are particularly sensitive. This can contribute to overall GDP growth moderation.