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

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Q: (IAS/2021)
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.

question_subject: 

Economics

question_exam: 

IAS

stats: 

0,354,80,24,30,26,354

keywords: 

{'indian government bond yields': [0, 0, 0, 1], 'term interest rates': [0, 0, 0, 1], 'united states federal reserve': [0, 0, 0, 1], 'reserve bank': [1, 0, 3, 4], 'inflation': [0, 1, 0, 3], 'india': [8, 1, 7, 13]}

The correct answer is option d. Indian Government Bond Yields are influenced by all three factors mentioned in the options.

The actions of the United States Federal Reserve can affect the demand for Indian Government Bonds as investors may prefer to invest in US securities instead of Indian bonds. This can impact the yield on Indian government bonds.
The actions of the Reserve Bank of India can also influence bond yields. For example, if the RBI increases the policy interest rate, it can lead to an increase in bond yields as investors may demand higher returns on their investments.
Inflation and short-term interest rates can also impact bond yields. If inflation expectations rise, investors may demand higher yields to compensate for the loss of purchasing power over time. Similarly, if short-term interest rates increase, bond yields may also increase.

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