If the price level at the end of year 1 is 150 and the price level at the end of year 2 is 160, the inflation rate in year 2 is 10%.

Name: If the price level at the end of year 1 is 150 and the price level at the end of year 2 is 160, the inflation rate in year 2 is 10%.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The inflation rate is calculated as the percentage change in the price level from one period to the next. The calculation for the inflation rate from year 1 to year 2 is $\frac{160 - 150}{150} \times 100 = 6.67%$, not 10%.

If the Price Level at the End of Year 1