Final answer:
The rate of inflation from 2003 to 2004, based on the given price index values, is calculated using the percentage change formula and is determined to be -8%. This indicates a deflation rather than inflation.
Step-by-step explanation:
The rate of inflation from 2003 to 2004 is determined by assessing the change in the price index values. In this case, the price index decreased from 150 in 2003 to 138 in 2004. The calculation involves understanding the percentage change in the index.
Expressed in simpler terms, if you had a basket of goods and services represented by the price index, it would have cost you 150 in 2003, but the cost decreased to 138 in 2004. The rate of inflation is the percentage decrease in this cost.
Calculating this decrease as a percentage of the original cost, we find that the rate of inflation is -8%. The negative sign indicates a reduction in the overall cost, representing a deflationary trend rather than inflation.
In summary, the answer is (C), reflecting the deflationary movement in the price index from 2003 to 2004. This analysis provides valuable insights into the changing costs of goods and services, contributing to a broader understanding of economic trends and conditions.