Suppose the GDP implicit price deflator was 112.7 in 2015 and 116.0 in 2016.Therefore,the inflation rate in 2016 would be
A) 2.8%.
B) 2.9%.
C) 3.3%.
D) 16%.

Question

Quizplus · Accepted Answer

The inflation rate can be calculated as the percentage change in the GDP implicit price deflator from 2015 to 2016. Therefore, using the formula:

Inflation rate = [(GDP implicit price deflator in 2016 - GDP implicit price deflator in 2015) / GDP implicit price deflator in 2015] x 100%

we get:

Inflation rate = [(116.0 - 112.7) / 112.7] x 100% = 2.9%

Therefore, the correct answer is B, 2.9%.

Suppose the GDP Implicit Price Deflator Was 112