Question

Assertion (A): In creeping inflation, the price level increases very slowly.

Reason (R): In hyper inflation, we expect prices to rise every hour.

Options

• Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) is true but Reason (R) is false.

• Assertion (A) is false but Reason (R) is true.

Answer 1

Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

Explanation:

The assertion is true because creeping inflation refers to a condition in which the overall price level rises slowly, typically at a low annual rate. The reason is also true because during hyperinflation, prices rise extremely quickly, sometimes even every hour or day, leading the value of money to fall sharply. However, the reason refers to hyperinflation, which is a different sort of inflation, and does not explain why creeping inflation entails a gradual rise in prices. As a result, the reason is not an accurate explanation of the assertion.