UPSC Prelims 2023— Question 22

This question tests Central Bank Interest Rates and Inflation under Monetary Policy. The central point is Central banks raised rates to counter inflation, using monetary policy to influence demand and expectations. Option A: Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I. This distractor is not the keyed answer because it conflicts with the specific factual relationship, chronology, institutional role, geographic association or conceptual distinction tested in the question. Option B: Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I. This is the keyed answer because it matches the governing fact or concept: Central banks raised rates to counter inflation, using monetary policy to influence demand and expectations. Option C: Statement-I is correct but Statement-II is incorrect. This distractor is not the keyed answer because it conflicts with the specific factual relationship, chronology, institutional role, geographic association or conceptual distinction tested in the question. Option D: Statement-I is incorrect but Statement-II is correct. This distractor is not the keyed answer because it conflicts with the specific factual relationship, chronology, institutional role, geographic association or conceptual distinction tested in the question. The question should be approached by checking each statement independently rather than accepting a familiar phrase at face value. This is particularly important in UPSC questions where a single incorrect institutional attribution, location, chronology, absolute word or causal link can invalidate an otherwise plausible option. The broader revision takeaway is to connect the keyed answer with the underlying concept rather than memorizing only the letter. The options also illustrate how UPSC constructs distractors by mixing correct facts with one altered detail. In revision, candidates should therefore retain both the positive fact and the nearest contrasting fact so that the same concept can be recognized when the framing changes in another year.