Economics · Economy

Analyze the following seven complex statements regarding monetary aggregates, inflation measurement, and the impact of banking technology on the money supply: Statement 1: The introduction of the Central Bank Digital Currency (CBDC) or e-Rupee in India is a part of the M0 (Reserve Money) aggregate as it represents a direct liability of the RBI. Statement 2: The money multiplier remains unaffected by the increasing adoption of UPI and digital payments because these transactions only shift funds between demand deposits without changing the monetary base. Statement 3: Shrinkflation is a phenomenon where companies reduce the size or quantity of a product while keeping the price the same, effectively increasing the per-unit price without showing up as a direct price hike in the CPI immediately. Statement 4: The 'Base Effect' refers to the impact of the price level of the corresponding month in the previous year on the current inflation calculation; a very low base in the previous year can artificially inflate the current inflation rate. Statement 5: In India, the 'Housing' component in the CPI has a weightage of approximately 10.07% but is only measured for the 'Urban' and 'Combined' indices, with a zero weightage in the 'Rural' index. Statement 6: The 'GDP Deflator' is considered superior to the CPI for measuring inflation because it includes the prices of all domestically produced final goods and services, including those exported to other countries. Statement 7: The RBI's 'Operation Twist' involves the simultaneous buying of long-term government securities and selling of short-term securities to flatten the yield curve without changing the total money supply. Which of the following options correctly identifies the valid statements?