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Questions and Answers
What is the 'base effect' in the context of inflation rate calculation?
What is the 'base effect' in the context of inflation rate calculation?
- It is the effect of unexpected changes in the currency exchange rates
- It is the impact of drastic deficiency in supply due to failure of crops
- It is the impact of the price levels of previous year on the calculation of inflation rate (correct)
- It is the impact of the surge in demand due to rapid economic growth
What can cause a rapid increase in the rate of inflation?
What can cause a rapid increase in the rate of inflation?
- A drastic deficiency in supply due to failure of crops (correct)
- A decrease in the interest rates
- A sudden increase in the production of goods
- A surge in demand due to rapid economic growth
Which of the following is not associated with the 'base effect'?
Which of the following is not associated with the 'base effect'?
- Impact of drastic deficiency in supply
- Impact of price levels of previous year
- Impact of surge in demand
- Impact of changes in labor force (correct)
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