If the current GDP deflator is 150 and last year's deflator was 120, what is the inflation rate?

Question

Quizplus · Accepted Answer

To calculate the inflation rate, we use the formula:

Inflation rate = ((current year GDP deflator - previous year GDP deflator) / previous year GDP deflator) x 100

Plugging in the values we get:

Inflation rate = ((150-120) / 120) x 100
Inflation rate = (30 / 120) x 100
Inflation rate = 0.25 x 100
Inflation rate = 25%

Therefore, the answer is option B, which is 25%.

If the Current GDP Deflator Is 150 and Last Year's