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. ​

All three statements are correct, so the answer is D. Bond yields are the price of money over a given tenor, and they move with expectations of policy, inflation and global capital flows.

• Statement 1 is correct. US Fed decisions shift global benchmark yields. When US yields rise, foreign investors pull money out of emerging-market debt, pushing Indian yields up. The 2013 taper tantrum is the standard example.
• Statement 2 is correct. The RBI sets the repo rate and conducts open market operations, including government securities purchases and sales. Its liquidity operations and policy stance move the short end and market sentiment across the curve.
• Statement 3 is correct. Inflation erodes real returns, so investors demand higher yields when inflation is high or expected to rise. Short-term rates anchor the curve, since long yields price in expected future short rates.

Syllabus link: this sits under Indian Economy (money markets, monetary policy, capital markets). Mains angle: how global monetary tightening raises India's borrowing costs for the government and corporates.

Trap: aspirants either dismiss the Fed because the RBI is the domestic regulator, or pick A after deciding inflation and short rates are not direct drivers. All three are valid drivers, so option D.