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05 Jul 2022, 07:50
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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) The inflation figures were computed on the basis of a representative sample of economic data rather than all of the available data.
b) Last year a dip in oil prices brought inflation temporarily below its recent stable annual level of 4 percent.
c) Increases in the pay of some workers are tied to the level of inflation, and at an inflation rate of 4 percent or above, these pay raises constitute a force causing further inflation.
d) The 1.2 percent rate of inflation last year represented a 10-year low.
e) Government intervention cannot affect the rate of inflation to any significant degree.
Which of the following, if true, most seriously weakens the conclusion above?
a) The inflation figures were computed on the basis of a representative sample of economic data rather than all of the available data.
b) Last year a dip in oil prices brought inflation temporarily below its recent stable annual level of 4 percent.
c) Increases in the pay of some workers are tied to the level of inflation, and at an inflation rate of 4 percent or above, these pay raises constitute a force causing further inflation.
d) The 1.2 percent rate of inflation last year represented a 10-year low.
e) Government intervention cannot affect the rate of inflation to any significant degree.
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05 Jul 2022, 07:51
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B Correct. This statement suggests that the 1.2 percent inflation rate is an unusual occurrence in recent years. Especially because the dip below the stable 4 percent rate was temporary, this unusual occurrence cannot be used as the basis for predicting a trend.
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