Question

he GDP deflator in year 4 is 120 and the GDP deflator in year 5 is 130. The rate of inflation between years 4 and 5 is

Answer 1

8.33%

Step-by-step explanation:

The GDP deflator in year 4 is 120

The GDP deflator in year 5 is 130

Therefore the rate of inflation between year 4 and year 5 can be calculated as follows

= 130/120

= (1.0833 -1) × 100

= 0.0833 × 100

= 8.33%

Hence the rate of inflation between year 4 and 5 is 8.33%