Suppose that the chain-weighted index for GDP in Gambia was 275 in 2011 and 350 in 2012. The inflation rate between those two years was approximately
A) 20.2 percent.
B) 27.3 percent.
C) 37.5 percent.
D) 75 percent.

Question

Quizplus · Accepted Answer

To calculate the inflation rate between 2011 and 2012, we need to use the chain-weighted formula:

Inflation rate = ((Nominal GDP in later year / Real GDP in later year) - 1) x 100

Using the given values, we have:

Nominal GDP in 2012 = 350
Real GDP in 2012 = (350/275) x 100 = 127.3

Therefore, the inflation rate between 2011 and 2012 was:

((350/127.3) - 1) x 100 = 27.3 percent.

Hence, the correct answer is B) 27.3 percent.

Suppose That the Chain-Weighted Index for GDP in Gambia Was