Based on the above passage, the following assumptions have been made:
- 1.Fiscal policies of governments are solely responsible for higher prices.
- 2.Higher prices do not affect the long-term government bonds.
Which of the assumptions given above is/are valid?
Answer & explanation
Answer: (d) Neither 1 nor 2
Neither statement is taken for granted by the passage. It describes how fiscal and monetary actions interact, so fiscal policy is not the ‘sole’ cause of higher prices, and it says nothing about long-term government bonds.
- ✗ 1. ‘Solely’ is extreme. The passage opens with inflation already rising and then explains how interest rates and government borrowing interact; it never makes fiscal policy the only cause of higher prices.
- ✗ 2. Government bonds are not discussed. If anything, the passage’s point about rising debt-service costs suggests that inflation and higher rates do affect government borrowing.
Remember · An assumption about something the passage never discusses is invalid; statements with ‘solely’ rarely survive.
Question and answer: UPSC's official GS Paper II (2024, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·