Module 1 of 4 in Macroeconomics and financial markets
Inflation, interest rates and the RBI
How inflation is measured, what sets interest rates, and how the Reserve Bank of India's monetary policy works.
3 lessons in this module. Progress is saved in your browser as you go.
Inflation and interest rates touch every company and every investment. This module explains how inflation is measured in India, why interest rates move, and how the RBI's Monetary Policy Committee sets the policy rate to target inflation.
By the end of this module you should be able to
- Explain how consumer and wholesale price inflation are measured and what core inflation excludes.
- Explain what determines interest rates and how they affect borrowers, savers and companies.
- Describe the RBI's inflation target, policy repo rate and the tools of monetary policy.
Lessons in order
Module test
10 questions, chosen at random from a bank of 30 questions and balanced across this module's learning goals and difficulty levels. Every question comes with an explanation. You need 80% to pass, and you can retake it as often as you like with a fresh set of questions.
This module builds on
- Saving, investing and inflation: That lesson introduces inflation and the Consumer Price Index.
- Nominal and real returns: The same nominal-to-real adjustment applies to interest rates.