If the consumer price index in 1980 was 44.0 (2002 is the base period)and it was 49.5 in 1981,what is the best estimate of the rate of inflation from 1980 to 1981?
A) 8.5%.
B) 9.4%.
C) 11.1%.
D) 12.5%.
E) 14.4%.

Question

Quizplus · Accepted Answer

To find the rate of inflation, we need to use the formula: (CPI in year 2 - CPI in year 1)/CPI in year 1 x 100
Plugging in the values: 
(49.5 - 44.0)/44.0 x 100 = 12.5%
Therefore, the best estimate of the rate of inflation from 1980 to 1981 is 12.5%, which is closest to option D (12.5%).

If the Consumer Price Index in 1980 Was 44