Question

If the consumer price index in Year 1 was 200 and the CPI for Year 2 was 230, the rate of inflation was:

a. 15 percent.
b. 7.5 percent.
c. 30 percent.
d. 230 percent.

Answer 1

The rate of inflation between Year 1 and Year 2 can be calculated using the provided CPI values and the percentage change formula. After calculation, the rate of inflation is determined to be 15 percent.

Step-by-step explanation:

The question at hand involves calculating the rate of inflation between Year 1 and Year 2 using the given Consumer Price Index (CPI) values. The rate of inflation is the percentage change in the price index from one year to the next, which in this case is between Year 1 and Year 2. To compute this, we can use the percentage change formula:

Inflation Rate = ((CPI in Year 2 - CPI in Year 1) / CPI in Year 1) × 100%

Plugging the provided values into this formula:

= ((230 - 200) / 200) × 100%

= (30 / 200) × 100%

= 0.15 × 100%

= 15% Therefore, the main answer is that the rate of inflation was 15 percent.