Table 24-7. The table below applies to an economy with only two goods - hamburgers and hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs.
-Refer to Table 24-7. If the base year is 2009, then the economy's inflation rate is
A)10 percent in 2010 and 6.36 percent in 2011.
B)10 percent in 2010 and 17 percent in 2011.
C)9.2 percent in 2010 and 6 percent in 2011.
D)8.22 percent in 2010 and 5 percent in 2011.

Question

Table 24-7. The table below applies to an economy with only two goods - hamburgers and hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs. 
-Refer to Table 24-7. If the base year is 2009, then the economy's inflation rate is
A)10 percent in 2010 and 6.36 percent in 2011. 
B)10 percent in 2010 and 17 percent in 2011. 
C)9.2 percent in 2010 and 6 percent in 2011. 
D)8.22 percent in 2010 and 5 percent in 2011.

Quizplus · Accepted Answer

The inflation rate is calculated by the percentage change in the price index from one year to the next. If the base year is 2009, the inflation rate in 2010 is 10 percent, and in 2011 it is 6.36 percent, as per the given options.