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Question No. 305Interactive Test Mode
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Q305. Indian Government Bond Yields are influenced by which of the following? 1. Actions of the United States Federal Reserve 2. Actions of the Reserve bank of India 3. Inflation and short-term interest rates Select the correct answer using the code given below.

Indian Government Bond Yields are influenced by which of the following?

  1. Actions of the United States Federal Reserve
  2. Actions of the Reserve bank of India
  3. Inflation and short-term interest rates Select the correct answer using the code given below.
Select the correct option below (or cross out options to eliminate)

Official Answer Key & Detailed Solution

Ready to check the official UPSC Answer Key?

Click any option above to test yourself under exam conditions, or reveal the explanation directly.

Official UPSC Answer KeyUPSC Prelims 2021 • Indian Economy

Correct Answer: Option (D) — 1, 2 and 3

Concept & Option Breakdown

Standard Reference Verified

All three factors significantly influence domestic sovereign bond yields:

  1. US Federal Reserve Actions: Interest rate changes in the US lead to cross-border capital reallocation (FPI flows), directly impacting the demand and yield of Indian sovereign bonds.
  2. RBI Actions: Monetary policy tools (repo rate changes, open market operations, CRR adjustments) directly determine domestic liquidity and sovereign yield curves.
  3. Inflation and Short-Term Rates: Expected inflation erodes the real return on fixed coupon payments, forcing investors to demand higher nominal yields.
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Question Specifications & Syllabus Mapping

Examination & YearUPSC Civil Services Preliminary Examination 2021 (Q305)
Paper & Marking SchemeGS Paper I • 2 Marks (-0.66 Negative for incorrect response)
Syllabus Subject & TopicIndian Economy → Indian Economic Planning & Growth
Official Answer KeyOption (D) — 1, 2 and 3

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Frequently Asked Questions — UPSC Prelims 2021 Q305

What is the official answer for UPSC Prelims 2021 GS Paper I Question 305 (Indian Economy)?

The official UPSC answer key for this 2021 Indian Economy (Indian Economic Planning & Growth) question is Option (D): "1, 2 and 3". Correct attempts carry 2 Marks with -0.66 Negative penalty for wrong answers.

Which UPSC Prelims syllabus topic does this 2021 question belong to?

This question belongs to GS Paper I under the subject "Indian Economy" and micro-topic "Indian Economic Planning & Growth". You can explore all repeated questions from Indian Economic Planning & Growth in Acme AI's 3D Prelims PYQ Realm or practice 50 full-length and sectional tests in the APT Prelims Test Series.

How can I solve this Indian Economic Planning & Growth UPSC Prelims question using option elimination?

To solve Indian Economic Planning & Growth questions in UPSC Prelims, identify extreme modifiers, verify core NCERT conceptual definitions, and eliminate mutually contradictory statement pairs before locking your final option.

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