If the Consumer Price Index was 125 in one year and 120 in the following year, then the rate of inflation was approximately
A)4.0 percent.
B)4.2 percent.
C)−4.0 percent.
D)−4.2 percent.

Question

Quizplus · Accepted Answer

The rate of inflation is calculated as ((CPI in the following year - CPI in the previous year) / CPI in the previous year) * 100. Here, it is ((120 - 125) / 125) * 100 = -4.0 percent.

If the Consumer Price Index Was 125 in One Year