If the Consumer Price Index rises from 125 in a year to 130 in the following year, the rate of inflation in that year is: Group of answer choices a) 4% B) 1.04% C) 3.85% D) 5%
If the Consumer Price Index rises from 125 in a year to 130 in the following year, the rate of inflation in that year is: Group of answer choices a) 4% B) 1.04% C) 3.85% D) 5%
Chapter17: Inflation
Section: Chapter Questions
Problem 4SQ
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Question
If the
Group of answer choices
a) 4%
B) 1.04%
C) 3.85%
D) 5%
Expert Solution
Introduction
Consumer Price Index (CPI): It refers to a statistical estimate which measures the change in the price level of a weighted average market basket of consumer goods and services purchased by households.
Inflation Rate: Inflation rate refers to the rate at which the value of a currency is falling and consequently the general level of price for good and services is rising.
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