Table 24-5
The table below pertains to Yackandsnack,an economy in which the typical consumer's basket consists of 2 cell phones and 20 ham sandwiches.

-Refer to Table 24-5.If the base year is 2006,then the economy's inflation rate in 2007 is

Question

Table 24-5
The table below pertains to Yackandsnack,an economy in which the typical consumer's basket consists of 2 cell phones and 20 ham sandwiches.
 
-Refer to Table 24-5.If the base year is 2006,then the economy's inflation rate in 2007 is

Quizplus · Accepted Answer

To calculate inflation rate, we need to find the percentage increase in the price level from the base year to the current year. The basket price in 2006 is ($100*2) + ($2*20) = $240. In 2007, the basket price is ($125*2) + ($2.50*20) = $270. Hence, the percentage increase in the price level is [(270-240)/240] x 100 = 12.5%. Therefore, the inflation rate in 2007 is 25% (since the base year is 2006).

Table 24-5 the Table Below Pertains to Yackandsnack,an Economy in Which the Which