If 2015 is the base year and the inflation rate between 2015 and 2016 is -4.5, the price index in 2016 is
A) 104.5.
B) 95.5.
C) -145.0.
D) cannot be determined from this information because the base year is not known

Question

Quizplus · Accepted Answer

Price index in 2016 = (1 + inflation rate between 2015 and 2016) * Base Year Price Index

= (1 + (-4.5%)) * 100  (since base year price index is usually taken as 100)

= (0.955) * 100

= 95.5

If 2015 Is the Base Year and the Inflation Rate