Official Answer Key & Detailed Solution
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Correct Answer: Option (B) — increase in price level
Concept & Option Breakdown
Standard Reference VerifiedNominal per capita income (at current prices) reflects both volume growth and general price rises (inflation). Real per capita income (at constant prices) is deflated using base-year prices to strip away the effect of the increase in the price level (inflation), making real growth lower than nominal growth in an inflationary environment.
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