In Nation A,the price index rises from 110 to 120 in a particular year.In the same year,the price level rises from 120 to 130 in Nation B.This means:
A) inflation in both nations is 10%.
B) Nation B suffers from hyperinflation.
C) both nations suffer from hyperinflation.
D) Nation A is experiencing inflation but Nation B is experiencing deflation.
E) Nation A is experiencing inflation of less than 9.3% and Nation B is experiencing inflation of less than 8.5%.

Question

Quizplus · Accepted Answer

To calculate the rate of inflation, we can use the following formula:
Rate of Inflation = ((New Price Index - Old Price Index)/(Old Price Index))*100
For Nation A:
Rate of Inflation = ((120 - 110)/110)*100 = 9.09%
For Nation B:
Rate of Inflation = ((130 - 120)/120)*100 = 8.33%
Therefore, Nation A is experiencing inflation of less than 9.3% and Nation B is experiencing inflation of less than 8.5%. So, the correct answer is E.

In Nation A,the Price Index Rises from 110 to 120