To determine the inflation rates between the years, we can use the formula for calculating the inflation rate based on the price index:
\[ \text{Inflation Rate} = \left(\frac{\text{Price Index in Current Year} - \text{Price Index in Previous Year}}{\text{Price Index in Previous Year}}\right) \times 100% \]
Let's calculate the inflation rates.
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Between Year 1 and Year 2:
- Price Index in Year 1: 90
- Price Index in Year 2: 100 \[ \text{Inflation Rate} = \left(\frac{100 - 90}{90}\right) \times 100% = \left(\frac{10}{90}\right) \times 100% \approx 11.1% \]
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Between Year 2 and Year 3:
- Price Index in Year 2: 100
- Price Index in Year 3: 95 \[ \text{Inflation Rate} = \left(\frac{95 - 100}{100}\right) \times 100% = \left(\frac{-5}{100}\right) \times 100% = -5% \]
This indicates that there was a 5% deflation between Year 2 and Year 3.
Thus, the results are:
- 11.1 percent inflation between Year 1 and Year 2
- 5 percent deflation between Year 2 and Year 3
The correct answer is d. 11.1 percent inflation between Years 1 and 2, and 5 percent deflation between Years 2 and 3.