For the following question(s), suppose an economy produces only pens and pencils, and that the quantity and price data is given by this table:

-What is the inflation rate using base year 1?
A) 10%
B) 15%
C) 20%
D) 25%
E) 13%

Question

For the following question(s), suppose an economy produces only pens and pencils, and that the quantity and price data is given by this table:
 
-What is the inflation rate using base year 1?
A) 10% 
B) 15% 
C) 20% 
D) 25% 
E) 13%

Quizplus · Accepted Answer

The inflation rate is calculated by comparing the price level in the current year to the price level in the base year. If the price level increased by 20% from the base year, the inflation rate is 20%.

For the Following Question(s), Suppose an Economy Produces Only Pens