If the ideal inflation rate in an economy is 3% and the inflation gap is 8%, the actual inflation rate in the economy must be

Question

​If the ideal inflation rate in an economy is 3% and the inflation gap is 8%, the actual inflation rate in the economy must be

Quizplus · Accepted Answer

The inflation gap is the difference between the actual inflation rate and the ideal inflation rate. We are given that the ideal inflation rate is 3% and the inflation gap is 8%. So, the actual inflation rate can be calculated as follows:
Actual inflation rate = ideal inflation rate + inflation gap
Actual inflation rate = 3% + 8%
Actual inflation rate = 11%
Therefore, the answer is D) 11%.

​If the Ideal Inflation Rate in an Economy Is 3

If the Ideal Inflation Rate in an Economy Is 3