Suppose a nation's CPI is 150 in Year 1 and 180 in Year 2. What is the rate of inflation?
A) 17 percent
B) 15 percent
C) 20 percent
D) 25 percent

Question

Quizplus · Accepted Answer

To find the rate of inflation, we use the formula:

Rate of inflation = ((CPI Year 2 - CPI Year 1) ÷ CPI Year 1) × 100

Plugging in the given values:

Rate of inflation = ((180 - 150) ÷ 150) × 100

Rate of inflation = (30 ÷ 150) × 100

Rate of inflation = 0.2 × 100

Rate of inflation = 20 percent

Therefore, the correct answer is C, 20 percent.

Suppose a Nation's CPI Is 150 in Year 1 and 180