ECONOMICS (CBSE/UGC NET)

ECONOMICS

INFLATION

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
In year 1, CPI is 97.5 and in year 2, CPI is 104.2. Here the inflation rate in year 2 is
A
6.2%
B
6.4%
C
6.6%
D
6.7%
E
6.9%
Explanation: 

Detailed explanation-1: -First, subtract the CPI from the beginning date (A) from the later date (B), and divide it by the CPI for the beginning date (A). Then multiply the result by 100 to get the inflation rate percentage.

Detailed explanation-2: -To find the CPI in any year, divide the cost of the market basket in year t by the cost of the same market basket in the base year. The CPI in 1984 = $75/$75 x 100 = 100 The CPI is just an index value and it is indexed to 100 in the base year, in this case 1984. So prices have risen by 28% over that 20 year period.

Detailed explanation-3: -If the consumer price index (CPI) in Year 1 was 200 and the CPI in Year 2 was 215, the rate of inflation is: a. 215 percent.

Detailed explanation-4: -To calculate the inflation rate, subtract the past cost of an item from its current cost, and divide that result by the past cost. Your result will be a decimal number, so multiply it by 100 to get a percentage.

There is 1 question to complete.