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Inflation
Inflation is a general increase in the price of goods and services. The inflation rate, as measured by the Consumer Price Index (CPI), was 9.9% in 20x2-x3 and is expected to be 8% in 20x3-x4. This does not mean that prices will be lower in 1993-94. It merely means that the general increase in prices will be lower. An example will clarify the point.
The prices of certain items are included in calculating the CPI. If a given quantity of these items cost Rs.10,000 in the beginning of 20x2-x3, then at the end of 20x2-x3 they would cost Rs.10,990 which is 9.9% more. Further at the end of 20x3-x4 they will be expected to cost Rs.11,869 which is 8% more than the cost at the beginning of the year. Clearly the prices have not fallen, only the rate of increase has slowed down.
Figure 1: Inflation as Reflected by the Cost of Items Worth Rs.10,000 on 1st April 1992
1st April 20x2 1st April 20x3 1st April 20x4
RANGE Range is the difference between the highest and the lowest value is series. This is the simplest absolute measure of dispersion. Symbolically : R= L- S
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