Final answer:
The inflation rate from 2014 to 2015 can be calculated using the percentage change formula with the GDP deflator values for each year. By applying the formula, the inflation rate is found to be approximately 7.44%.
Step-by-step explanation:
The student is asking how to calculate the inflation rate using the GDP deflator for two different years. The GDP deflator is an index that measures the changes in prices for all domestically produced goods and services in an economy. To find the inflation rate between 2014 and 2015, we need to apply the percentage change formula, which is:
Inflation rate = ((GDP Deflator in 2015 - GDP Deflator in 2014) / GDP Deflator in 2014) × 100%
Substituting the given values in the formula:
Inflation rate = ((130 - 121) / 121) × 100% = (9 / 121) × 100% ≈ 7.44%
So, the inflation rate from 2014 to 2015 is approximately 7.44%. It is important to note that even though the GDP deflator increased by a fixed number each year in the example, the inflation rate is not a fixed number but a percentage that depends on the previous year's index number. Therefore, a fixed increase in the index number will not translate to a fixed inflation rate without taking into account the base from which the increase occurred.