Assume that the expected rates of inflation over the next 5 years are 4 percent, 7 percent, 10 percent, 8 percent, and 6 percent, respectively. What is the average expected inflation rate over this 5-year period?
A)6%
B)9%
C)8%
D)5%
E)7%

Question

Quizplus · Accepted Answer

The average expected inflation rate over the 5-year period is calculated by summing the individual yearly rates and then dividing by the number of years. Thus, $ \frac{4\% + 7\% + 10\% + 8\% + 6\%}{5} = \frac{35\%}{5} = 7\% $.

Assume That the Expected Rates of Inflation Over the Next