Use the following to answer questions.
Exhibit: Consumer Price Index for a City

-(Exhibit: Consumer Price Index for a City) The base year is 2002. What is the inflation rate in 2005?

Question

Use the following to answer questions.
Exhibit: Consumer Price Index for a City
 
-(Exhibit: Consumer Price Index for a City) The base year is 2002. What is the inflation rate in 2005?

Quizplus · Accepted Answer

To calculate the inflation rate for 2005, we need to compare the CPI for 2005 with the CPI for the base year (2002). The CPI for 2005 is 180 and the CPI for the base year (2002) is 150. Using the formula: 
Inflation rate = ((CPI in year 2 - CPI in year 1) / CPI in year 1) x 100%
Inflation rate = ((180 - 150) / 150) x 100%
Inflation rate = (30 / 150) x 100%
Inflation rate = 20% 
Therefore, the inflation rate in 2005 is 20%.

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