If 1999 is the base year and the inflation rate between 1999 and 2000 is 7%, the price index in 2000 must be equal to:
A) 170.
B) 107.
C) 70.
D) cannot be determined from this information because the index in the base year is not given

Question

Quizplus · Accepted Answer

The price index in 2000 can be calculated using the formula: 
Price Index in 2000 = (Price in 2000 / Price in the Base Year) x 100

Since the inflation rate between 1999 and 2000 is 7%, we know that the price in 2000 is 107% of the price in 1999.

Using this information, we can plug in values for the formula: 
Price Index in 2000 = (107 / 100) x 100 = 107

Therefore, the price index in 2000 is 107, which means that prices in 2000 are, on average, 107% of the prices in 1999.

The correct answer is B) 107.

If 1999 Is the Base Year and the Inflation Rate