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a rapid increase in the rate of inflation is sometimes attributed to the “base effect”. what is “base effect”

A rapid increase in the rate of inflation is sometimes attributed to the “base effect”. What is “base effect” ?

A It is the impact of drastic deficiency in supply due to failure of crops

B It is the impact of the surge in demand due to rapid economic growth

C It is the impact of the price levels of previous year on the calculation of inflation rate

D None of the above

Answer & Explanation
Option: [C]

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