If P_t is the price level in time t, inflation is calculated as: A) 1/P_t B) $P _ { t + 1 } / P _ { t }$ C) $P _ { t + 1 } - P _ { t }$ D) $P _ { t } / P _ { t + 1 }$ E) $\left( P _ { t + 1 } - P _ { t } \right) / P _ { t }$

Question

Quizplus · Accepted Answer

Inflation is calculated as the percentage change in the price level from one period to the next, which is given by $(P_{t+1} - P_t) / P_t$.

If Pt Is the Price Level in Time T, Inflation Pt+1/PtP _ { t + 1 } / P _ { t }Pt+1​/Pt​

If P_t Is the Price Level in Time T, Inflation $P _ { t + 1 } / P _ { t }$