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

Question

Accepted Answer

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

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

Answer

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

Answer

(D) None of the statements (a), (b) and (c)