Table 11-4
The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. $$\begin{array} { | c | c | c }
\text { Year } & \begin{array} { c }
\text { Price of } \
\text { Meat }
\end{array} & \begin{array} { c }
\text { Price of a } \
\text { Tryy }
\end{array} \
\hline 2004 & \$ 3 \text { per pound } & \$ 2 \
\hline 2005 & \$ 1 \text { per pound } & \$ 7 \
\hline 2006 & \$ 4 \text { per pound } & \$ 5 \
\hline
\end{array}$$
-Refer to Table 11-4. If the base year is 2004, then the inflation rate in 2006 was

Question

Table 11-4
The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. $$\begin{array} { | c | c | c } 
\text { Year } & \begin{array} { c } 
\text { Price of } \
\text { Meat }
\end{array} & \begin{array} { c } 
\text { Price of a } \
\text { Tryy }
\end{array} \
\hline 2004 & \$ 3 \text { per pound } & \$ 2 \
\hline 2005 & \$ 1 \text { per pound } & \$ 7 \
\hline 2006 & \$ 4 \text { per pound } & \$ 5 \
\hline
\end{array}$$
-Refer to Table 11-4. If the base year is 2004, then the inflation rate in 2006 was

Quizplus · Accepted Answer

The inflation rate is calculated as the percentage change in the price level from one period to the next. In this case, the price level in 2004 is $3 per pound of meat and $2 per toy, for a total of $60. In 2006, the price level is $4 per pound of meat and $5 per toy, for a total of $90. The percentage change in the price level from 2004 to 2006 is therefore (90 - 60) / 60 * 100 = 50%.

Table 11-4 the Table Below Pertains to Wrexington, an Economy

Table 11-4
the Table Below Pertains to Wrexington, an Economy