If the price level increased from 120 to 126, then what was the inflation rate?
A)3 percent
B)5 percent
C)6 percent
D)None of the above is correct.

Question

Quizplus · Accepted Answer

To calculate the inflation rate, we need to find the percentage increase in the price level.

Inflation rate = ((New Price Level - Old Price Level)/Old Price Level) x 100

Substituting the given values: 
Inflation rate = ((126-120)/120) x 100 
Inflation rate = (6/120) x 100 
Inflation rate = 5%

Therefore, the correct answer is B) 5 percent.

If the Price Level Increased from 120 to 126, Then