Daily Current Affairs for CA Foundation — 27 May 2026

Exam-ready economy and business knowledge for CA Foundation Paper 4. Today's focus: money supply and inflation measures — frequently tested and central to understanding RBI policy in the news. Each item ends with a practice MCQ.

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1. Measures of Inflation: CPI vs WPI

Inflation is the sustained rise in the general price level. India tracks it with two main indices:

• Consumer Price Index (CPI): measures retail prices paid by consumers; it is the RBI's headline target for inflation (4% +/- 2%).
• Wholesale Price Index (WPI): measures prices at the wholesale/producer level; it excludes services.

MCQ: Q1. Which index does the RBI use as its headline target for inflation?

• (a) WPI
• (b) CPI
• (c) GDP deflator
• (d) IIP

Answer: (b) CPI

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2. Money Supply Aggregates

The RBI measures money supply in graded aggregates. In simple terms, M1 (narrow money) = currency with the public + demand deposits + other deposits with RBI. M3 (broad money) = M1 + time deposits with banks, and is the most widely watched aggregate.

MCQ: Q2. M3 (broad money) is essentially:

• (a) Only currency with the public
• (b) M1 plus time deposits with banks
• (c) M1 minus demand deposits
• (d) Foreign exchange reserves

Answer: (b) M1 plus time deposits with banks

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One-Liner Revision Section

1. CPI: retail inflation; the RBI's headline target (4% +/- 2%).
2. WPI: wholesale prices; excludes services.
3. M1: narrow money; M3: broad money (M1 + time deposits).

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