The annual 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 annual rate of inflation is calculated by taking the difference between this year's price index and last year's price index, then dividing that difference by last year's price index. This gives the rate of change in prices over the year.

The Annual Rate of Inflation Can Be Found by Subtracting