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 2010, then the economy's inflation rate is
A)2 percent in 2010 and 7 percent in 2011.
B)4.5 percent in 2010 and 5.2 percent in 2011.
C)9 percent in 2010 and 5.5 percent in 2011.
D)10 percent in 2010 and 6.36 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 2010, then the economy's inflation rate is
A)2 percent in 2010 and 7 percent in 2011. 
B)4.5 percent in 2010 and 5.2 percent in 2011. 
C)9 percent in 2010 and 5.5 percent in 2011. 
D)10 percent in 2010 and 6.36 percent in 2011.

Quizplus · Accepted Answer

The inflation rate is calculated based on the change in the price index from the base year. If the base year is 2010, the inflation rate for 2010 is 10 percent and for 2011 is 6.36 percent, as per the given options.