Consider the following statements regarding the measurement of rate of inflation I The rat...........

Finance (Phase -I & II) Inflation Trends

Consider the following statements regarding the measurement of rate of inflation:

I. The rate of inflation is measured on the basis of price indices which are of two kinds—Wholesale Price Index (WPI) and Consumer Price Index (CPI).

II. A price index is a measure of the average level of prices.

III. Price index shows the exact price rise or fall of a single good.

Which of the following statement(s) is/are correct?

Only I

I and II

II and III

All of the above

छोटे Courses बड़े Results

Master Inflation Trends

Prepare through Micro-courses

Try Now

Explanation:

The rate of inflation is measured on the basis of price indices which are of two kinds—Wholesale Price Index (WPI) and Consumer Price Index (CPI). A price index is a measure of the average level of prices, which means that it does not show the exact price rise or fall of a single good.

The rate of inflation is the rate of change of general price level which is measured as follows:
Rate of inflation (year x) = Price level (year x) –Price level (year x-1) / Price level (year x-1) ×100. This rate shows up in percentage form (%), though inflation is also shown in numbers i.e. digits.