Asked by Inusah Seidu on Jun 09, 2024
Verified
If the consumer price index was 100 in the base year and 107 in the following year, then the inflation rate was
A) -7 percent.
B) 7 percent.
C) 1.07 percent.
D) 0.7 percent.
Consumer Price Index
An indicator assessing the mean fluctuation over time in the expenses borne by city dwellers for a designated assortment of consumer products and services.
Inflation Rate
The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling, often expressed as a percentage.
Base Year
A reference year against which economic growth, price levels, and other data are measured over time.
- Understand the concept and calculation of the Consumer Price Index (CPI) and its applications in measuring inflation.
Verified Answer
SS
Shirley SlatonJun 13, 2024
Final Answer :
B
Explanation :
The inflation rate is calculated as the percentage increase in the price index from the base year to the following year. Here, it increased from 100 to 107, which is a 7% increase.
Learning Objectives
- Understand the concept and calculation of the Consumer Price Index (CPI) and its applications in measuring inflation.