A rapid increase in the rate of inflation is sometimes attributed to the “base effect”. What is “base effect”?
- AIt is the impact of drastic deficiency in supply due to failure of crops
- BIt is the impact of the surge in demand due to rapid economic growth
- CIt is the impact of the price levels of previous year on the calculation of inflation rateCorrect
- DNone of the statements (a), (b) and (c) given above is correct in this context
Explanation
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