The growth rate of per capita income at current prices is higher than that of per capita income at constant prices, because the latter takes into account the rate of

The correct answer is C because of how the terms are defined in economic accounting. Per capita income at current prices is calculated using the prevailing market prices of the year, which includes the effect of inflation. Per capita income at constant prices, also known as real income, is calculated using prices from a fixed base year.

The difference between these two growth rates is the rate of inflation, which reflects the increase in the general price level. In economic theory and the context of this specific question, an increase in the money supply is the fundamental driver that leads to an increase in the price level. Therefore, while constant prices account for the increase in the price level, the underlying factor being addressed in the options is the growth of the money supply which influences those prices.