Suppose the CPI last year is 121 and the CPI this year is 137. The correct method to calculate the inflation rate is
A) 137 - 121)/100 = 0.16.
B) 137/121) × 100 = 113.2.
C) 137 × 121 = 258.
D) [137 - 121)/121] × 100 = 13.2.

Question

Quizplus · Accepted Answer

The correct method to calculate the inflation rate is [(137-121)/121] × 100 = 13.2. This formula determines the percentage change in the CPI from the base year (121) to the current year (137), which represents the inflation rate. Option A has the calculation correct but missed the percentage multiplication. Option B used the wrong calculation method by dividing the CPI of the current year by the CPI of the base year and then multiplied by 100. Option C multiplied the two CPIs, which does not give the correct result.

Suppose the CPI Last Year Is 121 and the CPI