Suppose that a price index in Latvia was 120 in 2011 and 150 in 2012. The inflation rate between those two years was approximately
A) 8 percent.
B) 12.5 percent.
C) 25 percent.
D) 30 percent.

Question

Quizplus · Accepted Answer

The inflation rate is calculated as the percentage increase in the price index from one year to the next. The formula is [(New Index - Old Index) / Old Index] * 100. So, [(150 - 120) / 120] * 100 = 25 percent.

Suppose That a Price Index in Latvia Was 120 in 2011