A rapid increase in the rate of inflation is sometimes attributed to the "base effect". What is "base effect"?
1
It is the impact to drastic deficiency in supply due to failure of crops
2
It is the impact of the surge in demand due to rapid economic growth
3
It is the impact of the price levels of previous year on the calculation of inflation rate
4
None of the statements (a), (b) and (c) given above is correct in this context
5
Question Not Attempted