Q. Consider the following statements:
1.Headline inflation is a measure of the total inflation within an economy.
2.Headline inflation is less volatile than core inflation.
3.The value money falls with the increase in headline inflation.
How many of the statements given above are correct?
Answer: B
Notes:
Explanation –
Statements 1 and 3 are correct. Headline inflation measures the total inflation within an economy, including all commodities such as food and energy prices, which tend to be volatile. Rising inflation, including headline inflation, erodes the purchasing power of money, meaning that the value of money falls as inflation increases.
Statement 2 is incorrect. Headline inflation is more volatile than core inflation because it includes food and energy prices, which are subject to frequent fluctuations.
Source: The Hindu
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