In China, suppose that the price level was 100 in 2007, 110 in 2008, 120 in 2009, and 130 in 2011. Over this time period,
A)zero inflation occurred.
B)the inflation rate increased.
C)the inflation rate was positive.
D)the inflation rate decreased.
E)Both C and D are correct.

Question

Quizplus · Accepted Answer

Inflation rate is calculated by finding the percentage change in the price level over time. 
Between 2007 and 2008, the inflation rate is (110-100)/100 = 10%
Between 2008 and 2009, the inflation rate is (120-110)/110 = 9.1%
Between 2009 and 2011, the inflation rate is (130-120)/120 = 8.3%
Since the inflation rate decreases from 10% to 9.1% to 8.3%, option D is also incorrect. 
Therefore, the correct option is E, as the inflation rate is positive but fluctuates over time.

In China, Suppose That the Price Level Was 100 in 2007