In China, suppose that the price level was 100 in 2007, 110 in 2008, 120 in 2009, and 130 in 2011. Over these three years,
A) the inflation rate was positive.
B) prices were stable.
C) inflation did not occur.
D) the inflation rate accelerated.

Question

Quizplus · Accepted Answer

The inflation rate can be calculated as the percentage change in the price level from one year to the next. Using the formula, we can find that the inflation rates for each year are as follows:

- 2008: [(110-100)/100] x 100 = 10%
- 2009: [(120-110)/110] x 100 = 9.09%
- 2010: [(130-120)/120] x 100 = 8.33%

Since all the inflation rates are positive, we can conclude that inflation did occur over these three years. Therefore, the correct answer is A.

In China, Suppose That the Price Level Was 100 in 2007