Daily Current Affairs Quiz: January 28, 2026

Statement 1 is correct: Cost-push inflation occurs when rising input costs such as wages, raw materials, or energy increase production costs, leading producers to raise prices.

Statement 2 is correct: Demand-pull inflation arises when aggregate demand exceeds aggregate supply in the economy, creating upward pressure on prices.

Statement 3 is incorrect: Inflation generally erodes real income of wage earners unless wages rise proportionately, especially harming fixed-income groups.

Statement 1 is correct: Fiscal deficit is the excess of total expenditure over total non-borrowed receipts and indicates the extent of government borrowing.

Statement 2 is incorrect: A high fiscal deficit does not necessarily cause inflation; its impact depends on financing methods, economic conditions, and supply-side constraints.

Statement 3 is correct: Fiscal deficit directly reflects the borrowing requirement of the government to meet its expenditure obligations.

Statement 1 is correct: The current account records trade in goods, services, income, and current transfers between residents and non-residents.

Statement 2 is correct: The capital account records capital flows such as foreign direct investment, portfolio investment, and external borrowings.

Statement 3 is correct: A BoP surplus generally leads to an increase in foreign exchange reserves held by the central bank.

Statement 1 is correct: Consumer Price Index assigns a much higher weight to food and beverages compared to Wholesale Price Index, making CPI more sensitive to food price inflation.

Statement 2 is correct: CPI measures price changes at the retail level and reflects the actual inflation experienced by households in their day-to-day consumption.

Statement 3 is correct: The Reserve Bank of India uses CPI as the nominal anchor under the flexible inflation targeting framework to maintain price stability.

Statement 1 is incorrect: Monetary policy transmission occurs through multiple channels such as interest rate, credit, exchange rate, and expectations channels.

Statement 2 is correct: An increase in the policy repo rate raises borrowing costs, dampens demand, and helps contain inflationary pressures in the economy.

Statement 3 is correct: Stressed banking balance sheets and high non-performing assets can weaken credit flow, slowing monetary policy transmission.