Question

Suppose that the consumer price index of a country was 160 at year X and 164 at the end of year Y. What was the country's inflation rate during year Y?

A) 5%
B) 2.5%
C) 32%
D) 164%
E) 64%

Answer 1

The inflation rate for year Y is calculated as the percentage change in the CPI from year X to year Y. Using the given CPI values, 160 for year X and 164 for year Y, the inflation rate is found to be 2.5%.

Step-by-step explanation:

The inflation rate is calculated as the percentage change in the consumer price index (CPI) from one year to the next. To calculate the inflation rate for year Y using the CPI values provided, you would subtract the CPI of year X (160) from the CPI of year Y (164), and then divide the result by the CPI of year X. Finally, you multiply by 100 to convert the answer into a percentage.

In this case, the calculation would be ((164 - 160) / 160) × 100 = (4 / 160) × 100 = 2.5%. Therefore, the country's inflation rate during year Y was 2.5%.