If this year's price level is 126 and last year's price level was 120, the inflation rate is .
A) 6 percent a year
B) 0.95 percent a year
C) 5 percent a year
D) 1.05 percent a year

Question

Quizplus · Accepted Answer

The inflation rate can be calculated using the following formula:
Inflation rate = ((current year's price level - last year's price level) / last year's price level) * 100%
Plugging in the given values, we get:
Inflation rate = ((126- 120) / 120) * 100%
Inflation rate = (6 / 120) * 100%
Inflation rate = 0.05 * 100%
Inflation rate = 5%
Therefore, the correct answer is choice C, 5 percent a year.

If This Year's Price Level Is 126 and Last Year's