Last year's price level was 120 and since then there has been a 5 percent inflation. This year's price level is
A) 125.
B) 126.
C) 130.
D) none of the above.

Name: Last year's price level was 120 and since then there has been a 5 percent inflation. This year's price level is A) 125. B) 126. C) 130. D) none of the above.
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Question

Quizplus · Accepted Answer

A 5 percent inflation on a price level of 120 results in an increase of 6 (5% of 120 is 6), so the new price level is 120 + 6 = 126.

Last Year's Price Level Was 120 and Since Then There