If the aggregate price level at time t is denoted by Pt, the inflation rate from time t - 1 to t is defined as

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Quizplus · Accepted Answer

The inflation rate is defined as the percentage change in the price level from one period to the next. In this case, the inflation rate from time t - 1 to t is defined as:$ \pi_{t}=\left(P_{t}-P_{t}-1\right) / P_{t-1} $where $ P_{t} $ is the aggregate price level at time t and $ P_{t}-1 $ is the aggregate price level at time t - 1.

If the Aggregate Price Level at Time T Is Denoted πt=(Pt−Pt−1)/Pt−1 \pi_{t}=\left(P_{t}-P_{t}-1\right) / P_{t-1} πt​=(Pt​−Pt​−1)/Pt−1​

If the Aggregate Price Level at Time T Is Denoted $\pi_{t}=\left(P_{t}-P_{t}-1\right) / P_{t-1}$