Question

Assertion (A): Inflation measures how quickly the prices of goods and services are rising.

Reason (R): Consumer Price Index and Wholesale Price Index are most commonly used inflation indices.

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 since inflation measures the pace at which general prices of goods and services rise over time, diminishing money’s purchasing power. The reason is also true because the Consumer Price Index (CPI) and the Wholesale Price Index (WPI) are the two most often used indices for measuring inflation. However, the argument simply describes the methods used to quantify inflation and does not define what inflation is. As a result, the reason is not an accurate explanation of the assertion.