Questions
Single choice
If Year 1 is the base year and Year 2 is the following year, then the inflation rate in Year 2 equals
Options
A.[(CPI in Year 2 − CPI in Year 1)/CPI in Year 1] × 100.
B.[(CPI in Year 1 − CPI in Year 2)/CPI in Year 2] × 100.
C.[(CPI in Year 1 − CPI in Year 2)/CPI in Year 1] × 100.
D.[(CPI in Year 2 − CPI in Year 1)/CPI in Year 2] × 100.
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Step-by-Step Analysis
Reiterating the question: If Year 1 is the base year and Year 2 is the following year, then the inflation rate in Year 2 equals the formula for rate of change in the Consumer Price Index (CPI) from Year 1 to Year 2 expressed as a percentage.
Option 1: [(CPI in Year 2 − CPI in Year 1) / CPI in Year 1] × 100. This is the standard inflation rate formula:......Login to view full explanationLog in for full answers
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