3 Questions
What is the 'base effect' in the context of inflation rate calculation?
It is the impact of the price levels of previous year on the calculation of inflation rate
What can cause a rapid increase in the rate of inflation?
A drastic deficiency in supply due to failure of crops
Which of the following is not associated with the 'base effect'?
Impact of changes in labor force
Test your knowledge on the "base effect" and its impact on inflation rates. Choose the correct definition and understand how previous price levels affect the calculation of inflation.
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