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 later year - CPI in the earlier year) / CPI in the earlier year) * 100. Here, ((120 - 125) / 125) * 100 = -4.0 percent.

If the Consumer Price Index Was 125 in One Year