Suppose that the consumer price index of a country was 160 at Year 1 and 164 at the end of Year 2.What was the country's inflation rate during Year 2?
A) 5 percent
B) 2.5 percent
C) 64 percent
D) 164 percent
E) 32 percent

Question

Quizplus · Accepted Answer

Inflation rate during Year 2 can be calculated using the formula:

(Inflation rate) = [(CPI at end of Year 2 - CPI at Year 1) / CPI at Year 1] x 100

Substituting the values given in the question:

(Inflation rate) = [(164 - 160) / 160] x 100 = 2.5%

Therefore, the correct answer is B.

Suppose That the Consumer Price Index of a Country Was