If the consumer price index (CPI) at the end of year one was 100 and was 108 at the end of year two, the inflation rate during year two was
A) zero; the CPI of 100 indicates that prices were stable.
B) 8 percent.
C) 5 percent.
D) 108 percent.

Question

Quizplus · Accepted Answer

The inflation rate during year two is calculated as the percentage change in CPI from the end of year one to the end of year two. So, the inflation rate during year two is (108-100)/100 x 100 = 8 percent.

If the Consumer Price Index (CPI) at the End of Year