If the consumer price index rises from 120 to 126, the measured inflation rate is
Correct answer: B. 5 percent
- A. 4 percent
- B. 5 percent
- C. 6 percent
- D. 10 percent
Explanation
The inflation rate is calculated as (126 minus 120) divided by 120, multiplied by 100, which equals 5 percent. The index increased by six points, but the percentage change is measured relative to the original index.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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