If the consumer price index (CPI) was 125 at year-end of 2008 and 132.5 at year-end 2009, inflation during 2009 was
A) zero; prices were stable during 2009.
B) 6.0 percent.
C) 7.5 percent.
D) 12.5 percent.

Question

Quizplus · Accepted Answer

To calculate inflation, we use the formula:

Inflation = ((CPI in year 2 - CPI in year 1) / CPI in year 1) x 100

Substituting the values we have:

Inflation = ((132.5 - 125) / 125) x 100
Inflation = 6%

Therefore, the correct answer is B) 6.0 percent.

If the Consumer Price Index (CPI) Was 125 at Year-End