Question

49. Last year the rate of inflation was 1.2 percent, but for the current year it has been 4 percent. We can conclude that inflation is on an upward trend and the rate will be still higher next year.

Which of the following, if true, most seriously weakens the conclusion above?

• A. a) The inflation figures were computed on the basis of a representative sample of economic data rather than all of the available data.
  
• B. b) Last year a dip in oil prices brought inflation temporarily below its recent stable annual level of 4 percent.
  
  
• C. c) The 1.2 percent rate of inflation last year represented a ten-year low.
  
  
• D. d) Government intervention cannot affect the rate of inflation to any significant degree.

Answer 1

The correct option is B b) Last year a dip in oil prices brought inflation temporarily below its recent stable annual level of 4 percent.

Ans:49) (b)
Sol: According to choice (b), last year’s inflation figure was an anomaly, and inflation has returned to its recent stable level. There is thus less reason to conclude that inflation will rise any further, making (b) the best answer.