Final answer:
The student's question might be referencing the Taylor rule's target inflation rate, which is different from calculating the actual inflation rate using index numbers. The provided examples illustrate calculating inflation by finding the percentage change in the cost of a basket of goods between two periods, which would result in an inflation rate of 6.5% for the example given.
Step-by-step explanation:
According to the Taylor rule, if the inflation rate is given as 2, this might refer to a desired or target inflation rate set by a central bank or monetary policy rule. However, in the context of the information provided, when calculating the inflation rate using the percentage change formula based on index numbers, we do not have a direct reference to the Taylor rule. Instead, for the calculation of inflation from period 1 to period 2 based on the provided cost of basket of goods or index numbers, you would use this formula:
Calculate the percentage change in the index number or the cost of the basket of goods.
Use this percentage change to determine the inflation rate between the two periods.
For example, if the total cost of a basket of goods rose from $100 to $106.50 from period 1 to period 2, the inflation rate would be calculated as ((106.50 - 100) / 100) × 100%, which equals 6.5% inflation rate for that time period.