Exhibit 13-1 Consumer Price Index $$\begin{array} { | c | c | }
\hline \text { Year } & \begin{array} { c }
\text { Consumer } \
\text { Price Index }
\end{array} \
\hline 1 & 100 \
2 & 110 \
3 & 115 \
4 & 120 \
5 & 125 \
\hline
\end{array}$$ As shown in Exhibit 13-1, the rate of inflation for Year 2 is:
A) 5 percent.
B) 10 percent.
C) 20 percent.
D) 25 percent.

Question

Exhibit 13-1 Consumer Price Index $$\begin{array} { | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Consumer } \
\text { Price Index }
\end{array} \
\hline 1 & 100 \
2 & 110 \
3 & 115 \
4 & 120 \
5 & 125 \
\hline
\end{array}$$ As shown in Exhibit 13-1, the rate of inflation for Year 2 is:
A) 5 percent.
B) 10 percent.
C) 20 percent.
D) 25 percent.

Quizplus · Accepted Answer

The rate of inflation for Year 2 is calculated by taking the difference in the Consumer Price Index (CPI) between Year 2 and Year 1, dividing by the CPI of Year 1, and then multiplying by 100 to get a percentage. For Year 2, the CPI went from 100 to 110. Therefore, the rate of inflation is $\frac{110 - 100}{100} \times 100\% = 10\%$.

Exhibit 13-1 Consumer Price Index As Shown in Exhibit 13-1, the Rate of Inflation for c