If the Consumer Price Index changes from 120 in year one to 144 in year two, the rate of inflation in the intervening year is
A)10 percent.
B)12.5 percent.
C)20 percent.
D)25 percent.
E)30 percent.

Question

Quizplus · Accepted Answer

The rate of inflation can be calculated using the formula: 
((CPI in year two - CPI in year one)/CPI in year one) x 100%

Plugging in the values: 
((144 - 120)/120) x 100% = 20%

Therefore, the rate of inflation in the intervening year is 20%.

If the Consumer Price Index Changes from 120 in Year