Which of the following assumptions is/are valid?
- Deflation strategies can be used to make manufacturers appear to be doing better than they actually are.
- When input and output prices are both deflated against a single input price, it is referred to as 'double deflation'.
Select the answer using the code given below.
Detailed Explanation:
Double deflation uses separate deflators for input and output prices. The passage explicitly states that if India uses the same deflator for both inputs and outputs (instead of double deflation), falling oil prices would make manufacturers appear more productive than they actually are.
- Statement 1 is Valid: Using a single deflator when input prices fall can overestimate real value added, making manufacturers appear better than reality.
- Statement 2 is Invalid: Double deflation means deflating inputs and outputs separately, not using a single input price for both.
- Therefore, only Statement 1 is valid, making Option 1 the correct answer.
Question 3 of 13 Inference & Conclusion
Practice PYQ questions from this topic across all years
Which of the following conclusions are valid? Sport is more than just games; it is...
Which of the following statements reflect the logical and rational inferences that ca...