Q. Consider the following statements:
1.Retail inflation primarily measures changes in consumer prices.
2.A rising retail inflation rate generally indicate increasing unemployment in an economy.
Which of the statement(s) given above is/are correct?
Answer: A
Notes:
Explanation –
Statement 1 is correct. Retail inflation primarily measures changes in consumer prices. Retail inflation is measured by the Consumer Price Index (CPI), which tracks the changes in prices paid by consumers for a basket of goods and services over time.
Statement 2 is incorrect. A rising retail inflation rate does not generally indicate increasing unemployment in an economy. The relationship between inflation and unemployment is described by the Phillips Curve, which suggests an inverse relationship: as inflation rises, unemployment tends to decrease, and as inflation falls, unemployment tends to increase.
Source: The Hindu
