Refer to the information provided in Table 22.5 below to answer the question(s) that follow.
Table 22.5
-Refer to Table 22.5. If 2015 is the base year, the inflation rate between 2014 and 2016 is
A) 4.0%.
B) 5.8%.
C) 6.2%.
D) 9.4%.

Question

Refer to the information provided in Table 22.5 below to answer the question(s) that follow.
Table 22.5 
-Refer to Table 22.5. If 2015 is the base year, the inflation rate between 2014 and 2016 is
A) 4.0%. 
B) 5.8%. 
C) 6.2%. 
D) 9.4%.

Quizplus · Accepted Answer

To calculate the inflation rate between 2014 and 2016, we need to find the percentage change in the consumer price index (CPI) between those two years. Using the formula (CPI year 2 - CPI year 1)/CPI year 1 x 100, we get: (245.1 - 231.4)/231.4 x 100 = 5.8%. However, since 2015 is the base year, we need to adjust for the fact that the CPI for the base year is 100. To do this, we divide the CPI for each year by the base year CPI and multiply by 100. So, the adjusted CPI for 2014 is 98.1 (231.4/235.2 x 100) and the adjusted CPI for 2016 is 106 (245.1/231.4 x 100). Using the formula with the adjusted CPIs, we get: (106 - 98.1)/98.1 x 100 = 8%, which is the inflation rate relative to the base year. Therefore, the inflation rate between 2014 and 2016, with 2015 as the base year, is 6.2% (8% - 1.8% adjustment).

Refer to the Information Provided in Table 22