The rate of inflation can be found by subtracting:
A)the real income from the nominal income.
B)last year's price index from this year's price index.
C)this year's price index from last year's price index and dividing the difference by this year's price index.
D)last year's price index from this year's price index and dividing the difference by last year's price index.

Question

Quizplus · Accepted Answer

The rate of inflation is calculated by finding the percentage change in the price index over a certain period of time. This can be done by subtracting last year's price index from this year's price index and dividing the difference by last year's price index. This method is known as the "percentage change method" and is commonly used by economists to calculate the rate of inflation. Therefore, choice D is the correct answer.

The Rate of Inflation Can Be Found by Subtracting