The following table contains prices and quantities for the three goods produced in the country of Linfieldia.

-Refer to the table above.Assuming that 2015 is the base year,what is the inflation rate between 2014 to 2016 using the GDP deflator and the Consumer Price Index?
A) 74 percent with the GDP deflator, 94 percent with the Consumer Price Index
B) 94 percent with the GDP deflator, 74 percent with the Consumer Price Index
C) 74 percent with both
D) 94 percent with both

Question

The following table contains prices and quantities for the three goods produced in the country of Linfieldia.
 
-Refer to the table above.Assuming that 2015 is the base year,what is the inflation rate between 2014 to 2016 using the GDP deflator and the Consumer Price Index?
A) 74 percent with the GDP deflator, 94 percent with the Consumer Price Index 
B) 94 percent with the GDP deflator, 74 percent with the Consumer Price Index 
C) 74 percent with both 
D) 94 percent with both

Quizplus · Accepted Answer

The inflation rate between 2014 and 2016 using the GDP deflator is (120-100)/100 = 20%, or 74% over the two-year period. The inflation rate between 2014 and 2016 using the Consumer Price Index is (120-100)/100 = 20%, or 94% over the two-year period.

The Following Table Contains Prices and Quantities for the Three