If the Consumer Price Index changes from 120 in year one to 122 in year two, the rate of inflation in the intervening year is
A)20 percent.
B)0 percent.
C)22 percent.
D)2.0 percent.
E)1.67 percent.

Question

Quizplus · Accepted Answer

The rate of inflation is calculated as the percentage change in the Consumer Price Index (CPI) from one year to the next. The formula is: [(CPI in Year 2 - CPI in Year 1) / CPI in Year 1] * 100. Using the given values: [(122 - 120) / 120] * 100 = 1.67 percent.

If the Consumer Price Index Changes from 120 in Year