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

-4.8%
-4.8%

0.05%
0.05%

4.5%
4.5%

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:

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

Substituting the given values:

\[ \text{CPI in Year One} = 105 \] \[ \text{CPI in Year Two} = 110 \]

Now, plug the values into the formula:

\[ \text{Inflation Rate} = \frac{110 - 105}{105} \times 100 = \frac{5}{105} \times 100 \approx 4.76% \]

Rounding to one decimal place, the inflation rate is approximately 4.8%.

So, the correct response is 4.8%.