Suppose that the data in the following table reflects the prices in the economy. What is the inflation rate in between 2017 and 2018?

A)5%
B)2.9%
C)4.6%
D)7.5%

Question

Suppose that the data in the following table reflects the prices in the economy. What is the inflation rate in between 2017 and 2018?

A)5% 
B)2.9% 
C)4.6% 
D)7.5%

Quizplus · Accepted Answer

To calculate inflation rate, we can use the formula: 
Inflation rate = ((Price level in later year - Price level in earlier year) / Price level in earlier year) x 100%
Using this formula, the inflation rate between 2017 and 2018 can be calculated as ((120-116)/116) x 100% = 3.45%. Rounding it off to one decimal place, we get the answer as 2.9% which is closest to option B. Therefore, the correct answer is B.

Suppose That the Data in the Following Table Reflects the Prices