### IIFT 2017 Question Paper Question 106

Instructions

The table below relates to data on Wholesale Price of India (WPI) for the period 2001-02 to 2015-16. WPI-based inflation is defined as percentage change in the value of the Index. Based on the table, answer the following questions:

Question 106

# Between 2001-02 and 2015-16, which of the following components- PA, AC, F&P; and MP - have shown the second highest percentage increase in WPI ?

Solution

There is a change in the base year used for calculation in 2005.
Therefore, the actual change will be proportional to the product of the change till 2005 and the change till 2015-16.
PA:
WPI in 2001-02 = 168.4
WPI in 2015-16 = 188.1*2.496 = 469.4976

AC:
WPI in 2001-02 = 161.3
WPI in 2015-16 = 187.3*1.767 = 330.9591

F&P
WPI in 2001-02 = 226.7
WPI in 2015-16 = 280.2*1.788 = 500.9966

MP:
WPI in 2001-02 = 144.3
WPI in 2015-16 = 166.3*1.534 = 255.1042

MP has not doubled where as the other 3 have more than doubled during the given period. We can eliminate MP.
AC has increased slightly more than twice its original value. F&P has increased by a percentage greater than AC. PC has increased by a substantial amount over twice its initial value. Therefore, F&P has the second highest percentage increase in WPI and hence, option C is the right answer.