If this year the price level is 135 and last year it was 125, the inflation rate is
A) 8 percent.
B) 10 percent.
C) 12 percent.
D) none of the above.

Question

Quizplus · Accepted Answer

The inflation rate is calculated as the percentage change in the price level from one year to the next. The formula is [(Current Year Price Level - Previous Year Price Level) / Previous Year Price Level] * 100. Using the given numbers: [(135 - 125) / 125] * 100 = 8 percent.

If This Year the Price Level Is 135 and Last