GyanGram
ATTEMPT · INDIAN ECONOMY · PRELIMS 2011
A rapid increase in the rate of inflation is sometimes attributed to the “base effect”. What is “base effect”?
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A rapid increase in the rate of inflation is sometimes attributed to the “base effect”. What is “base effect”?
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• Correct Answer: C
• Base effect is the distortion in current inflation caused by abnormally high or low price levels in the base year.
• A low base year inflates current year-on-year figures even with modest current rises.
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