Question

Economics Semester Exam
21 of 3121 of 31 Items




Question
If the consumer price index is 105 in Year One and 110 in Year Two, what is the rate of inflation from Year One to Year Two?(1 point)
Responses

-4.8%
-4.8%

4.8%
4.8%

0.05%
0.05%

4.5%

Answer 1

To find the rate of inflation from Year One to Year Two using the Consumer Price Index (CPI), you can use the following formula:

\[
\text{Inflation Rate} = \left(\frac{\text{CPI in Year Two} - \text{CPI in Year One}}{\text{CPI in Year One}}\right) \times 100
\]

Substituting the given values:

\[
\text{Inflation Rate} = \left(\frac{110 - 105}{105}\right) \times 100
\]

\[
\text{Inflation Rate} = \left(\frac{5}{105}\right) \times 100
\]

\[
\text{Inflation Rate} \approx 4.76\%
\]

Rounding it off gives approximately 4.8%.

Therefore, the correct response is **4.8%**.