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)

Question

Responses

4.5%
4.5%

4.8%
4.8%

0.05%
0.05%

-4.8%

Answer 1

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

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

In this case:

• CPI in Year One = 105
• CPI in Year Two = 110

Now, substitute these values into the formula:

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

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

\[ = 0.047619 \times 100 \]

\[ \approx 4.76% \]

Rounding to one decimal place gives approximately 4.8%.

So, the correct response is:

4.8%