The price index in the first year is 120, in the second year is 150, and in the third year is 180. What is the inflation rate between the first and second year and between the second and third year?
A) 20 percent between the first and second year, 33 percent between the second and third year
B) 25 percent between the first and second year, 20 percent between the second and third year
C) 25 percent between the first and second year, 50 percent between the second and third year
D) 30 percent between the first and second year, 30 percent between the second and third year

Question

Quizplus · Accepted Answer

The inflation rate from the first to the second year is calculated as (150 - 120) / 120 = 0.25 or 25%. From the second to the third year, it is (180 - 150) / 150 = 0.20 or 20%.

The Price Index in the First Year Is 120, in the Second