In a particular economy,the price index was 120 in 2012 and 130 in 2013.Which of the following statements is correct?
A)The economy experienced a rising price level between 2012 and 2013.
B)The economy experienced a higher inflation rate between 2012 and 2013 than it had experienced between 2011 and 2012.
C)The inflation rate between 2012 and 2013 was 10 percent.
D)The base year is 2011.

Question

Quizplus · Accepted Answer

The price index increased from 120 to 130 between 2012 and 2013, indicating a rising price level.

B is false as there is no information given about inflation rates between 2011 and 2012 to compare to.

C cannot be determined as we do not know the base year or the weights of the goods and services included in the index.

D is also false as there is no information given about the base year.

In a Particular Economy,the Price Index Was 120 in 2012